Problem solved!

I went back and rebuilt a new application from scratch (leaving out all the unnecessary details) and tried it out: AjaxScaffold worked perfectly! That's good.

I was still bothered by the fact that the old application was failing... I really like to understand problems and the solutions so that I can avoid the problem in the future. Finally, I realized that there was one thing I hadn't undone from the effort to get Streamlined up and running: they recommend a "monkeypatch" [I'm just quoting -- I don't know the genesis of the terminology] to prototype.js. They refer to a bug report - #6579 -- that caused problems in FireFox, which I'm using [see http://www.streamlinedframework.org/]. I can no longer find #6579, but there is a duplicate - #7657 - at http://dev.rubyonrails.org/ticket/7657 which says the same thing.

Well, once I removed the patch everything started working just fine!

Education for the day:

1. Always undo EVERYTHING, even if it looks like a no-brainer [Note to self: figure out how to get svn installed on my windows box].
2. Never trust version 0 code
3. Be very careful about instructions to modify code that they didn't develop.

Now it's back to working on the application. Fun!