Update - it seems to be the pythoncom27.dll somehow. I tried deleting the InprocServer32 key and my com server works now.
I see that I can dodge this issue by specifying _reg_clsctx_ = pythoncom.CLSCTX_LOCAL_SERVER, but I'm concerned about what the problem could be with pythoncom27.dll and whether that will bite me some other way later. Any guesses on what the problem might be? Also - what is the purpose in defaulting to use both InprocServer32 and LocalServer32? Based on my problem, the default windows choice appears to be InprocServer32. When/why would it move on to the LocalServer32 entry? It clearly does not do it on error. Russ
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