I actually took care of this by "downgrading" the IOS on the router. The previous version of the IOS works fine and I'm now able to use the ACLs as you'd expect. Too bad CISCO can't release new IOS without breaking the old! It's not a "healthy" solut...

Kim -    Did you ever get this answered satisfactorily? I have the same issue and understand ACLs are applied the same way you do: top to bottom. As you have witnessed - no traffic goes through when you set the ACLs the way we would assume.   Russ