EUREKA!!!!!!!!!!!!!!!!!!!!!!!!!!!! YES!!!!!!!! YOU ROCK!!!!

after ~40 hours......................
sfcfiles.dll is the culprit!!!
pre-update rollup version = 5.0.2195.6717 with a date of 6/19/2003
post-update version = 5.0.2195.7038 with a date of 4/8/2005
on freshly patched install (with WU asking for rollup only) i went into DOS (using fat32 here) and copied sfcfiles.dll version 7038 over older 6717 version in system32 and system32\dllcache (must do both!!)
rebooted and VOILA! nothing in WU!!
my i386 source folder has:
sfcfiles.dl_ 53kb 6/19/2003
sfcfiles.dll 974kb 7/26/2000
my i386 sourcess folder has:
sfcfiles.dl_ 53kb 6/19/2003
sfcfiles.dll 951kb 4/8/2005
is it the sourcess files or something during installtion? (using "c" compression method during compile)
also, 2 days ago did an install using a fresh copy of w2ksp1 slipstreamed with sp4 and hfslip. no winnt.sif file. and same thing - WU wants rollup. sfcfiles had same dates and sizes in source and sourcess folders as above.
GETTING CLOSER!

bpr.