Sorry to leave this thread hanging - had to run out to Denver for a few days.  I have also observed occasional morph problems, and use the solution of opening in Poser and saving (you have to have external morphs turned off in poser for this to help).  This helps if a pmd file was used.  This object was saved and opened that way.  The key is that it has worked fine in C7, just not in C8.  I have opened a version saved in the browser in C7 which I know worked.

As for WIndows 7, I am well aware of the problems, and have a separate drive for programs so Carrara is not installed in the programs directory.  Likewise all my runtimes are on this separate (not C:) drive.

I'll keep experimenting and come back if I reach any conclusions.

Thanks to all.

Lotus 123 ~ S-Render ~ OS/2 WARP ~ IBM 8088 / 4.77 Mhz ~ Hercules Ultima graphics, Hitachi 10 MB HDD, 64K RAM, 12 in diagonal CRT Monitor (16 colors / 60 Hz refresh rate), 240 Watt PS, Dual 1.44 MB Floppies, 2 button mouse input device.  Beige horizontal case.  I don't display my unit.