I confirmed that the Droid itself can, in-fact, still stream BT audio. I borrowed a buddy's
MOTOROKR™ S9 and they worked perfectly. In fact, I now want them.
So this is creating a stronger case that it is a sync issue.
Weird thing again, synce can connect to the droid in BT audio mode, it says it is connected, and when I un-check the media audio in the "options" of the sync connection, the sync immediately connects to the USB stick for audio and the connection says disconnected. Also the phone resumes playing the audio on itself. When I turn back on the media audio for the sync connection it sometimes struggles to find it again when I choose "system-settings" connect bluetooth and choose droid. That is where it will often hang and say connecting... for minutes before saying no bluetooth device found (even though the phone is still paired and functions fine.)
The BT audio feature is called A2DP I found with some digging, so I'm thinking that is where the specific issue is. There is a thread on that although not related to sync.
music player auto-starts with every BT A2DP connection?!?!
I am going to borrow another person's Droid here at work to see if that works or not on my sync again.
I have a buddy with iPhone so I should try that also just to see if it is ANY BT audio device or just Droids. Would be the full gamut if I can find someone here with a HTC or something not on android 2.1 or 2.0.1 (since my issue started with 2.0.1).
OH I almost forgot to mention I have seen some threads about the Voice privacy setting and noticed mine is ON so I turned it off and I will try it out at lunch to see if this has any affect.