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Finally got it working
I was finally able to get things working again on Friday. We basically went without monitoring and filtering from Nov 6 through Dec 21, or 45 days.
Given how these things go, I'm somewhat confident this was the fix, but not 100% sure.
Since I'm running windows 7 on the children's computers, I had installed Windows Live Essentials a long time ago. Part of the package has integration for Parental controls with windows 7. I first uninstalled NF (with reboot afterwards). I then went into control panel, uninstall, and then selected Windows Live Essentials 2011. I then clicked <Remove one or more Windows Live programs>. I then selected the parent controls (can't remember exactly how this showed up). I then reinstalled NF.
The key indicator that things were starting to work is when in the child's account I click <show house rules> from the NF system tray, we finally started seeing some rules. I then attempted going to known blocked sites. Note - this worked immediately for 1 child's account, but not for the other. It took some time before the 2nd child's started getting blocked as it should have. I also started seeing logged activity on the NF web page.
The delayed logging with the 2nd child kind of bothered me, as well as seeing the infamous spawning of NF icons in the system tray (ccSvcHst and ccsvchst.exe processes). It only got up to 3, but is back down to 1 (must have had a reboot since Friday).
If this is indeed the case, the question still remains - what did Norton do with the latest update back in early November to break things.
I hope this helps others.