so ends up the EMMC chip has bad sectors and this is a problem with this phone. I ended up on freenode at #htc-holiday and had a good chat with IOMonster, so I will try to return the phone to HTC 866.449.8358 and if not I will do the following.
by the way fastboot boot recovery-beta2.img did get me into recovery -- strange no one pointed that out to me...
Here is how I found out the EMMC ship has write errors.
C:\Program Files (x86)\Android\android-sdk\platform-tools>fastboot erase cache
erasing 'cache'...
OKAY [ 0.197s]
finished. total time: 0.199s
C:\Program Files (x86)\Android\android-sdk\platform-tools>fastboot oem rebootRUU
...
(bootloader) Start Verify: 3
(bootloader) Start Verify: 3
(bootloader) erase sector 130560 ~ 131071 (512)
(bootloader) [SD/EMMC]Error status=0x400008
(bootloader) DATA_TIMEOUT
(bootloader) SD: write failed in CMD25.
(bootloader) emmc_erase(1852): sd_write_sector failed!
OKAY [ 1.184s]
finished. total time: 1.186s
C:\Program Files (x86)\Android\android-sdk\platform-tools>fastboot flash zip c:\
junk\zom.zip
sending 'zip' (420878 KB)...
OKAY [ 39.172s]
writing 'zip'...
(bootloader) adopting the signature contained in this image...
(bootloader) zip header checking...
(bootloader) zip info parsing...
FAILED (remote: 99 unknown fail)
finished. total time: 40.786s
I will try to remember to come back and post what happens when I call HTC tomorrow.