Its official!  VSS sucks a-holes!   I have applied sp 6, I got the hot fix from microsoft to fix the "version not found" bug and I have tried every trick I could find to make VSS recurse.  It just won't.  If I set "Act on projects recursively" in VSS Explorer, close it, and then call ss without the -R flag, it will recurse as I would expect.  If throws a "Version not found" for all those projects not having a labeled file but that would be fine.  Unfortunately, all the products that integrate with vss call it witht the -R flag.

I do not have access to run analize or ddupd but I verified that the structure matches what Micorosoft states is the indicator that the latest db version is there.  I am in the process of trying to copy the entire vss database locally so I can try to fix it on that end and then forward instructions to our network guys on why the stupid thing still, after TWO YEARS of this crap, does not work properly. 

There is a strong possibility that I will not be able to fix this vss garbage and will have to port my c# / OLE programatic work around into nant and replace my vss tasks with my custom task.  that would not be the worst thing I have ever had to do.

I'll continue this thread when I have more to add...