My current findings: It has something to do with exporting on the command of TransferText NOT on importing. I recreated the Spec file in msa2003 format but still get the same error. A colleague tells me that security levels may be a factor when exporting from msa 2003.
I found the culprit, and should have went with my suspicions "Could it be the ext of bat???". From MS (http://support.microsoft.com/default...b;en-us;304206), "Importing or Linking a Text File Fails for a File That Does Not Have a Valid File Name Extension"; it must be txt, tab, asc, or csv for an extention. Then rename it as you need it later.
PS-- I'm back from vacation from Thailand safely; we opted out of visiting the beach and were in Bangkok when the Tsunami hit.