Finally...
What I did was to resample all my photos that I saw VSD getting stuck on.
I resampled the images using Corel Photopaint to a smaller physical size 3-4" vertical x whatever horizontal at a setting of 120 dpi.
I saved all these resampled pics as .gifs in a new folder I called Webpics.
I also renamed each file, ie. if the original was called Fred_10.jpg, the new one was called Fred_10A.gif, this made swapping the old pics for the new a lot easier.
After making all the substitutions I punched upload and held my breath, and lo and behold I had a successful upload!
I hope this helps others to work through the VSD stalling problem, a slow PITA solution but it works.
Four pages done, thirty to go.

Okay, you guys remember a while back, say five minutes ago I told you I had a successful upload?
I just added one new photo to one of my pages.
Before I dropped it into VSD I resampled it at 120 dpi and saved it as a .gif.
After placing it on the page I try uploading and get the dreaded "An error has ocurred", so I try re-syncing, same results.
So I remove my published site, save my VNU file and reboot, I then upload the site again and it works WTF???
So as it stands, every time I want to add a photo successfully I'll have to go through a multi-stage process to get it to work; good thing I'm still young.

If I created a login for you, would you want to try uploading using my hosting service? Testing another web host might scratch off another possible reason for uploading errors. I could whip up something temporary and we can delete it all afterward. Just a thought.

Might be worth trying Adam, but it's 5:30 am here and I'm off to the studio to spend another day in outerspace.
Although I'll be on this board from time to time I won't be back to my home PC (the one that my site is on) until this evening.
Thanks - Boyd

Hey Boyd, I just sent you an email w/ the FTP info. Hope you get it. I have good success uploading w/ that server, so we'll see how that goes.

Adam, tried uploading with the info you provided, went through flawlessly.
Then I tried again but this time with my full site, the one with all those "corrupted" images, that one uploaded perfectly as well.
So what does this tell us?