This does appear to be a bug. Checked online, nothing I'm doing is out of the ordinary. Adobe lists examples very close to what I'm doing except my module connects to a db - http://livedocs.adobe.com/flex/3/html/help.html?content=modular_5.html
I went through the preferences and changed some settings, the one that may have made the difference is telling Flex Builder to use the internal browser (default setting). Closed FB and re-opened, everything appears to be functioning normally. I don't get a preview of the module in the parent application, but that is fine with me.
