Hey Walt-
I had a problem awhile back with my 3,5 active sync "degrading" over time. It would start to sync, but it would drop off the tasks portion..eventually, it would go into a loop mode where it tried to sync (spinning green circle) but the spiining circle would go on for about 5 minutes until it would time out and give me an error message (Unable to sync)...duh!
I believe it was a corrupt app that was causing the problem, because my backup sd card wouldn't even restore it. Unfortauntely, it took a cold, hard reset and a re-install of Active sync (I kept 3.5) with a new folder name, to get me up and running again..