Thanks Miescha. Well...the good news is, we started taking things apart according to these instructions and sure enough - this is what is wrong with the bike. This is a YAY - because it's the cheaper fix of the two possibilities we had narrowed to.
For those of you with 03 and older Roadstars....take my advice (and that of the guy from the roadstar clinic) and make this "fix" or "upgrade" to your bike so this doesn't happen to you when you are far from home. I guess I'm lucky this happened in my driveway.
2003 Roadstar - "Princess"
2003 Ninja 500 R
2003 Vstar 650 Custom (sold)