Thanks for the input.
I decidendles a virtuald to retry the upgrade. The previous attempt warned that a device driver might not work (it handles a virtual CD/DVD), so I've uninstalled it before starting. I started the upgrade last night just before midnight and watched the process pretty closely.
The first part wen smoothly with a single reboot. Started the "Transferring files, settings, and programs" section and the appended % indicator progressed from 0 to 6% before the status message started to include the file count. By the time the % indicator reached 40%, the status message read:
"Transferring files, settings, and programs (220183 of 1125463)"
Great! It's moving right along. The message seemed to update after every 305 files. Things progressed and finally, it read:
"Transferring files, settings, and programs (553568 of 1125463)"
... and then the upgrade posted a REBOOTING message and the % indicator read 62%.
The system rebooted and, after a few startup messages, returned to the progress panel. The % indicator now read 63% and the status message bounces between:
"Transferring files, settings, and programs"
No file count! I guess that must have been lost at reboot.
I suspect the upgrade encountered a condition whereby the file was locked for some reason and it solved the issue by rebooting. I have continued to observe disk activity, so I will let the system upgrade to continue for the next 24 hours. This will give it a total of 36 hours for the upgrade. If it doesn't finish in that time, I'll just blow it off and wait for SP1.
I'll let everyone know by Monday AM (Central US).