I ended up just repeating the process and installing a fresh 4.08 again , and patching to the 4.09 then to the HSFX. It works perfectly. Fairly simple too.
I would like to play around with it some more, but my first impressions are good. I was able to load the game with the HSFX and 6dof mods in 10 seconds.
I'm not sure why all the stubbornness from other mod users. It appears you can add any other mods that didn't make it in this version simply by adding them to the mods folder as you would with the UI.
My guess is adding aircraft would be the exception to this process but if you wanted decal shine or other weathering mods, or special displays they can be plopped in the mod folder like any other modded game.
I've got my sound folders running in it just fine.
thanks for putting this together,
Bill
This happened to me in testing once, so your not alone. I couldn't find the problem, it was a clean install, but I suspect somewhere there was corruption. I reinstalled it, same as the first time and everything worked. So your not imagining it, I've had this happen to, but I don't know what it was.

A number of people have jumped to the conclusion that you can't "Mod a Mod". I don't know why, but you certainly can add any Mod you want to the HSFX package. It was something we specifically wanted to be sure people could do. We are absolutely against trying to lock an end user into any package, especially our own.
The only reason the installer deleted the Files and Mods Folders, was for our community of users, to free up a couple of Gb. of disk space, because they would no longer need those files. This may have been interpreted as HSFX "getting rid of other Mods". I wish we had done this differently now, but we just weren't thinking of how it would impact other communities.