TY Sebastian.   I went ahead and truncated all the tables you mentioned and also used the SQL script provided on your website for the "Search".
LOL..  Interesting predicament though, I could not run any of the SQL from within DNN because I kept getting SQL timeout errors so I had to use SQL tools.
Unfortunately this did not help.

I have sent an email to the SQL guys asking for a copy of the log files from this morning and last night.  Maybe this will shed some light on what is happening.
In the meantime I have ruled out network connection from web server to db server, web server configuration issues, and any Windows eventlog/systemlog entries.

I created a gemini issue for this problem a few weeks ago.  At one point it was defined as "In Progress", but looks like it has been taken off the radar. 

http://support.dotnetnuke.com/issue/ViewIssue.aspx?id=10722&PROJID=2

So I had an interesting day.

I was able to install updates to 4 modules Reports, Survey, UsersOnline, & Announcements.  BUT still got the same damn error trying to install forms and Lists!

Arrrghh!    Does anyone have a manual install check list for modules.  Maybe I can manually install forms and Lists?
It's been sooooo long since I had to manually install a module I forgot how to do it.