== Solved - see post below.
That didn't change anything. I did notice when changing that line though the host was delaying changes I made by ftp and the site. I deleted that line and refreshed the browser, checked the page source and the line was still there. Shortly after that I refreshed again and the changes showed up. Host has a public_html and www folder with copies of the same files. It seems they also have a cached version outside of this that updates immediatly with new files but very small changes seem to take about 5-10 min to show up. Never had this before but definately a host side problem there...hopefully transient. Figured I'd mention it in case it made a difference when considering the other things I tried.
I renamed the images and thumbs folder to images-x and thumbs-x and created new folders for images and thumbs, uploaded a handfull of temp images and ran buildgallery.php leaving the captions and link underlining checked since i had unchecked them with the original gallery. Changes again took 10 min to show up and host was showing the original gallery completely intact even though I could see by FTP that the folders were renamed. Oh well, waited and it eventually synced up and I had a completley working gallery with about 7 new images. The download button worked just fine. Figured maybe I just messed something up when building the orignal gallery so I deleted the temp images and restored the originals to the correct locations then ran buildgallery again leaving the comments and link underlining checked (just in case that was an issue). Once updated, the comments and links were there but the download button once again didn't work.
Took it one step further and loaded a copy of the xml file from the temp gallery I had made and after waiting on the server to update, the gallery showed about 7 X's as expected since the temp images were gone. Funny thing was it would go through the motions of saving a file when download images button was pushed... of course the file wouldn't save since the image didn't exist. I compared a working XML from the temp files to the XML from the full gallery and there are no differences other than the number of images in the gallery.
I think I'll pull all images off the server and put only 100 or so and test it out. If I can get the download button working I'll try adding more images to see what happens. Any ideas?