Greg,
I have tried multiple ways of updating the sylink file the problem being not the procedure but rather the settings in the sylink file (or lack thereof). Thanks for the CleanWipe info - I could have used that before clean install as SEP leaves a lot of junk behind when uninstalled. It might come in handy next time.
I have actually solved my problem with help from Symantec tech support. The issue being, during SEPM upgrade from version 11 to 12, while moving from SBS 2003 to SBS 2011, as the clients were being upgraded to 12.1.2, there was a communication problem. It was solved by customizing their communication settings (or messing with them until they connected). This worked (sort of) until now - the next client version upgrade -when the "creatively" modified settings stopped working. After a few re-installations, countless versions of sylink files and quite a few SymHelp files, all I had to do is reset management server list to default in communication settings. We were using a custom one that had the wrong port (or no port set) and the clients were communicating due to some weird combination of backed up working settings from previous installation. Once the management server list was reset, the clients connected and updated policies, the working sylink was downloaded and everything is working as intended.
Thank you all for working with me on this.