Melanie,
I think we have our wires crossed a little.

Are you setting up the timer to count internal pulses? I am trying to count a 60hz 50% duty cycle pulse from the mains supply. When I've counted 21600 of them, I want the counter to reset, send a increment to a counter, and start again.

Therefore, I dont understand why we need to measure 16.67ms. This is the period between highs at the i/p. Time really has nothing to do with it, we just need to get to 21600 and say, ok, im done, reset me please :-)
So thats why I have the numbers in there that I do. Start the counter at 43935, when we've counted 21600 pulses we should be at 65535. The next pulse will set the interupt, and we start again. Well, start the timer at 43936 I guess.

65535 = $FFFF
43935 = $AB9F
21600 = $5460

65535 - 21600 = 43935

According to Microsoft's calculator.
Thanks for the tidbit on the resume command.

Disclaimer:- I know you're not stupid, so the natural conclusion is that I must be LOL. Thanks for your help Mel.