Thank you very much for your post. I am a newbie at electronics but love it. This is actually my first project other than my wonderful blinky led.

Here is what the voltages are...

My 24VAC Transformer actually outputs 27.6VAC my service to my home runs a little hot (roughly 112VAC) which might account for the higher voltage.

Right before the 0.33uf cap before the regulator the voltage is 37.9V. So you are exactly right on the over-voltage. 7805 that I have is rated up to 35 volts. I did read the datasheets pretty throughly, but I wasn't expecting the voltage to rise from the caps. I only expected the voltage to raise from the rectifier, which it rectifies and the voltage is roughtly 33 volts. Looks like the caps push it up 4 almost 5 volts.

What is the best suggested way to drop the voltage within range? Should I try to drop it on the AC side or the DC side?

Would a choke inline before the regulator be the best way to go about this?

If a choke is the best solution, how do I determine the henry value? My circuit won't draw more than 350ma.

Thanks Again,
Nemesis