I've followed the various threads and information flying back and forth  
and have successfully tested the PC-Modem communications.  Problem  
seems to be that the init string being sent by pppd via chap stops in  
the middle for no apparent reason.

Can someone send me their /etc/ppp/options and ~/.ppprc for  
comparision?

FYI, I have set up the file/permissions as thus.
/etc/ttys:
tty01 "/usr/libexec/getty std.57600" unknown off local rtscts

crw-rw---- 1 uucp dialer 8, 1 /dev/tty01

/etc/group:
dialer:*:117:me