After many debugging and troubleshooting efforts IBM has provided a hotfix for the issue I discussed in Attachment ExtractFile Limitation post.  It seems that the lotusscript Dir function causes a server crash in version 7.0.2 and it seems that it may also be the case for version 8 and probably pre 7 versions.  When a path longer than 255 characters is passed to the Dir function it causes a crash instead of throwing an error.  This can easily be fixed by checking the path length before sending it to the Dir function, but it was a bit troublesome to track down because you don’t expect the server to crash when calling a simple function so most of the time attention is focused on other more complex functions and third-party functions.

Hope this helps anybody that runs into the same situation.