Eureka!
You won't believe it. Or, maybe you will.
I downloaded the 1632 unzipped lit file from Baen, and had the same problem as before... it would download only to disappear in the ether.
So I thought I would just try the zipped lit file, and see what happened. The file downloaded, I unzipped it, then I double clicked on the lit file, and it immediately “expanded” (as if by CLIT) and created a new folder with the expanded files inside.
Next right clicked on the original 1632 lit file, and low and behold, the default action was to invoke CLIT and expand the file.
Next I removed CLIT, re downloaded the lit book I originally wanted from Fictionwise, I got the expected dialog box, saved the file, and it worked perfectly!! It seems the file previously was downloading, but when finished, it was being told to “expand” and NOT interface with MSReader, so it deleted itself.
All is well, but now I need to figure out how to re-install CLIT (ConvertLit, the gui version) and NOT have it became the default action for lit files.
Thanks, Wallcraft, AnemicOak, and all other for the help. This is one headache solved... sow on to the next one!
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