Just a follow-up for anyone who may find this post after experiencing the same problem ....
I sent Gregg the "filever" list that he asked for and he spotted several .tmp files in that folder ... signifying that there had been a problem with the reboot after the installation. He was further able to interpret the "filever" and spot the dll's that had not upgraded ( in my case, they were: msdbg2, csm, and pdm ).
After making a backup copy of the folder, I deleted those 3 dll's, as well as all of the .tmp files ... then did a repair of the VS2008 install.
That did the trick ... I'm happy to report that the debugger in now functioning in VS2008, as well as VS2005.
Much thanks to Gregg for his assistance.