I figured it out by using the tool script that I found in ArcGIS 10.0 toolbox albeit I was working in 9.3.1.The code takes a point featureclass and converts it into lines and I modified it to work with reading a file.  My actual task was to read a Zmap file in and convert it into line contours.Following is the ESRI code as found in the PointsToLines script tool:
#PointToLine.py script from ArcGIS 10.0 ArcCatalog Point to Line tool
import arcgisscripting
import os
import types
def convertPoints():
    gp = arcgisscripting.create(9.3)
    gp.OverWriteOutput = 1
    # Input point FC
    # Output FC
    # Feature Field
    # Sort Field
    # Close Line or Leave Open
    inPts       = gp.GetParameterAsText(0)
    outFeatures = gp.GetParameterAsText(1)
    IDField     = gp.GetParameterAsText(2)
    sortField   = gp.GetParameterAsText(3)
    closeLine   = gp.GetParameterAsText(4)
    if IDField in ["", "#"]: IDField = None
    if sortField in ["", "#"]:
        cursorSort = IDField
    else:
        if IDField:
            cursorSort = IDField + ";" + sortField
        else:
            cursorSort = sortField
    if types.TypeType(closeLine) != types.BooleanType:
        if closeLine.lower() == "false":
            close = False
        else:
            close = True
    convertPointsToLine(gp, inPts, outFeatures, IDField, cursorSort, close)
def enableParam(hasMZ):
    if hasMZ:
        return "ENABLED"
    else:
        return "DISABLED"
            
def convertPointsToLine(gp, inPts, outFeatures, IDField, cursorSort, close):
    try:
        # Assign empty values to cursor and row objects
        iCur, sRow, sCur, feat = None, None, None, None
        desc = gp.Describe(inPts)
        shapeName = desc.ShapeFieldName
        # Create the output feature class
        #
        outPath, outFC = os.path.split(outFeatures)
        gp.CreateFeatureclass_management(outPath, outFC, "POLYLINE", "",
                                         enableParam(desc.hasM),
                                         enableParam(desc.hasZ),
                                         inPts)
        # If there is an IDField, add the equivalent to the output
        #
        if IDField:
            f = gp.ListFields(inPts, IDField)[0]
            tMap = {'Integer': 'LONG', 'String': 'TEXT', 'SmallInteger': 'SHORT'}
            fType = f.type
            if tMap.has_key(fType):
                fType = tMap[fType]
            fName = gp.ValidateFieldName(f.name, outPath)
            gp.AddField_management(outFeatures, fName, fType, f.precision, f.scale, f.length,
                                   f.aliasName, f.isNullable, f.required, f.domain)
        # Open an insert cursor for the new feature class
        #
        iCur = gp.InsertCursor(outFeatures)
        sCur = gp.SearchCursor(inPts, "", None, cursorSort, cursorSort)
        sRow = sCur.Next()
        # Create an array and point object needed to create features
        #
        array = gp.CreateObject("Array")
        pt = gp.CreateObject("Point")
        # Initialize a variable for keeping track of a feature's ID.
        #
        ID = -1
        while sRow:
            pt = sRow.GetValue(shapeName).GetPart(0)
            if IDField: 
                currentValue = sRow.GetValue(IDField)
            else:
                currentValue = None
            if ID == -1:
                ID = currentValue
            if ID <> currentValue:
                if array.count >= 2:
                                        
                    # To close, add first point to the end
                    #
                    if close:
                        array.Add(array.GetObject(0))
                    
                    feat = iCur.NewRow()
                    if IDField:
                        if ID: #in case the value is None/Null
                            feat.SetValue(IDField, ID)
                    feat.SetValue(shapeName, array)
                    iCur.InsertRow(feat)
                else:
                    gp.AddIDMessage("WARNING", 1059, str(ID))
                                  
                array.RemoveAll()
            array.Add(pt)
            ID = currentValue
            sRow = sCur.Next()
        # Add the last feature
        #
        if array.count > 1:
            # To close, add first point to the end
            #
            if close:
                array.Add(array.GetObject(0))
                                
            feat = iCur.NewRow()
            if IDField:
                if ID: #in case the value is None/Null
                    feat.SetValue(IDField, currentValue)
            feat.SetValue(shapeName, array)
            iCur.InsertRow(feat)
        else:
            gp.AddIDMessage("WARNING", 1059, str(ID))
        array.RemoveAll()
    except Exception as err:
        gp.AddError(err.message)
    finally:
        if iCur:
            del iCur
        if sRow:
            del sRow
        if sCur:
            del sCur
        if feat:
            del feat
if __name__ == '__main__':
    convertPoints()