After deleting book from e-reader, then connecting to computer using Win Explorer made sure everything was delete. Then had Calibre send the book to the device from the PRC (MOBI) and converting on the fly and then had the same problem occured. Just for the fun I grabbed the spouse's Kobo Touch and did the same as above. Well the book appeared I could read it with no problems. It is a partial solution, now I just have to fight spouse for her reader.
Before you ask what are the difference:
Spouse Device Info: Software 1.9.9 (R31493, 8/19/11, Mac Add; 00:01:36:FC:E6:B3
Mine Device Info: Software 2.3.1 (R45611, 12/7/12, Mac Add; 00:01:36:FD:52:1A
That is all the difference I saw on the device information page.
Thanks for all the help!!!