THANKS FOR THE GREAT TIPS AND ADVICE. The culprit turned out to be a 80 MB zip in the root of C:\ that was hanging up on the read access. Once I removed this, it works like it did in the past. THANKS AGAIN FOR THE HELP!!
NOTE: for those interested I downloaded and ran a utility called Filemon, from a site called sysintenals. within 3 minutes of runnif this log I found the problem. great utility and its free! I will be re-installing Diskeeper this weekend