OK, it appears that LR under OS x 10.5 may have problems with an image file that doesn't have a file extension. I decided to sync the folders one at a time to see if I could find which one might be giving LR a problem, and found two folders that contained an image without an extension. one file name was xxxxxjpg ... the dot was missing. Another contained a tiff file with no extension.
Correcting both of these solved LR's problem with them when syncing the overall large folder. These are images in very old folders so I'm pretty sure the file names have not changed since version 1. However, there is a strong possibility that these images were not in my library so version 1 actually just skipped them during a sync where as version 2 gets hung up on them.
Anyway, sycning now works fine once I corrected the file extension on these 2 image files.