Freakin' Magic...Fixed...Close thread
Adobe indicates that on occassion you may need to delete the entire user configuration folder...I did and restarted DW...lost all extensions (of course) but spry still did not work correctly....BEAR in mind that I know the files actually DO NOT get written to the site folder until you save the document. I then renamed the old Configuration directory and restored the old from the Recycle Bin and then deleted the renamed folder. Restarted DW and Voila...now it works...back to writing the .js and .css files to the assets folder...Go figure!