I will NEVER, NEVER, NEVER use Defpoints again - I will slap the hands of anyone in this company that does!!
I appears that the Defpoints layer IS the problem. I changed the block from Defpoints to 'NoPlot' and reproduced the process and it works fine - no remnants of the 'Done' block left in the dwg when 'Laydelete' is used.
But, there HAS to be some way of getting rid of the OLD one from all of those dwgs without doing dwg by dwg.
craigr