We may have learned of the issue. I just upgraded to 10.2.1. Apparently, 10.2.1 does not work with ARC-HYDRO and it is a known bug. Can anyone confirm this?
As it is, I had not moved the rasters over to my local drive but I have not needed to in the past. I can try it if necessary. If I can confirm the 10.2.1 vs ARC-Hydro glitch that will save some efforts.
Thanks.