Eureka! Yes I'm that happy. I found the reason why the USB interrupt was not working.
It was the line I uncommented in the cdc_desc.bas file (#define USE_USB_BUS_SENSE_IO).

I read somewhere, don't remember where, when using self powered circuit one should
define a Vbus sense I/0 and uncomment the line above in the cdc_desc file. This is supposed to make the design more USB compliant. If the user unplugs the USB cable, the 3V reg. is turned off. I verified this with a meter and peeked how it is done in the assembly USBSERVICE routine.

I don't mind if the 3V reg. stays on in my design. I am using a power supply. But I guess
it might be a concern in a battery powered design.

I should have mentioned the uncommenting bit in my post. I ASSUMED....

Anyway, thanks Darrel for giving me my timer back.
This is fantastic -
Mike