[PPCFreak]

Well, I can't believe its something with the ROM.
I had WM6.1 working just fine for 2 weeks and was sync'ing both with work PC and Exchange server (I sync my contacts and calendar with PC and my email with a different Exchange server; my own email server).
The issue only came around when I had to hard-rest my phone and I did a PIM Backup / Restore of Contacts and Calendar over the weekend (phone froze on the weekend and I did not have access to the contacts and calendar events; so I restored my calendar and contacts from a PIM Backup v2.5). This got me my contacts and calendar and I was good to go over the weekend.

When I tried to sync with my computer on Monday, it thru up that activesync error. I have some new items to include in my next flash so will try that in the next day or so.

I have tried unchecking each item to sync and that did not fix anything.
I tried deleting the partnership and creating a new one. That did nothing.

Will post if my re-flash works. Will probably uninstall ActiveSyn on pc as well just to be safe.