Adobe reader 9 had preference of web browser in 'internet' section, but now XI doesn't. It is moved to each browsers extension settings.
You need to set IE to view pdf in browser window so that FM interactive contents works properly on Windows.
I only created a new account and that solved the problem. Did nothing to IE although I may have opened in the old account and I've used a few utilities to clean up and fix the drive, etc.
So it seems most likely that the problems I experienced were due to corruption in prefs, cookies, who knows. It just works now and that is what I want.
Also, interesting was how much faster and smoother 13 is for importing pdfs in nested folders.