phew.... I got it working. So here is what I did: Complete uninstall again, then reinstall, also installed sp5, then restarted the project, but this time I zoomed into the layer of 1:10,000 before I added the Imagery base map, once I was on that layer then I added the basemap and enabled boundaries and transportation, and it finally worked with a clear picture. Just for kicks I zoomed out to view the whole LA area, then tried to zoom back in again with the imagery basemap layer on, and ended up with the same problem, but I just zoomed back out and disabled imagery and zoomed in with only streets layer on, then turned on imagery and it worked again no problems. I would like to say that this is what fixed it, but I cannot because I did try this before prior to reinstall and it did not work. So what actually made this work seems like a combination of the reinstall, sp5, and turning off the basemap while zooming.
Thanks for all of your help.
Greg.