OK, this is a case of the Service Pack breaking something that wasn't in need of fixing.
So any of you that have the ear of the product development team, it's time to give them an earfull. I'm a long way from home, and can not recall IF or which SP is installed on that machine. Here at the clients office they have
AutoCAD Civil 3D 2008 SP2 installed and the XDREF does not function properly.
The points continually assume the incorrect properties, irrespective of any combination of settings or process including LOCKING the point group. This is just plain bad programming on Autodesks' part, and failure to properly test the SP's before offering them to the public to install. This lies right on the edge of Criminal.
The good news is it still works at home, the bad news IF you installed the SP it won't work as shown in the AVI. The short answer would be UNINSTALL C3D, and reinstall bare-naked version and your XDREFS will function as desired.
:ugly: