Verifying files is a no-go, it does a double checksum then it says its DLing filemanifest
0/0b 0:00 remaining at 0/0b/s..... with the only option of quit
DLing and trying to run that other thing gave me my original problem... 'checking updater'..... it think there is the problem... its still getting denyed somewhere therefore the .lock is created to restrict access
Plans have changed for tonight, and I apologize.
I'll make it up to you tomorrow night and be on MSN so we can keep going. 
█ Players Guide to the Cities
Hey SK,
Well, that .lock file would seem to indicate there's some sort of access restriction going on, but on what, and why... I'm clueless. I might research this further if it turns out to be the main issue we're facing now.
How about verifying all files? Is that option available or does the CoHUpdater try to download said files / file manifest right away?
Also, if I was to try something, I would move that CoH folder to another location, download http://download.cityofheroes.com/US/CoH_NA_Setup.exe and when the time comes, point it to that folder (or the parent folder, if you see it try to install to ...\city of heroes\city of heroes\).
Make sure you take ownership of said folder, and have admin rights all over it and subfolders, just in case.
I'll be online tonight and keep MSN open if you're available to continue troubleshooting.
█ Players Guide to the Cities