So this is what fixed my situation.
I reverted back to a clean W2K8 R2 snapshot.
Did NOT install the vSphere client (C# one).
Just started with the simple install -
Got a bunch of script messages "Stop Running Script" -> Selected "NO".
And it worked !
So what is the issue with having the vSphere Client installed first?
Be curious of anyone else runs into the same issues - please post your results.