I think this might be the store you are talking about:  
http://www.graylinelinen.com/  How'd I miss it when I was there?

Sg

> Date: Mon, 30 Mar 2009 21:17:47 -0400
> From: [email protected]
> To: [email protected]
> Subject: Re: [h-cost] New York fabric shopping
> 
> Robin Betzhold wrote:
> > My favorite stores are all the hole in the wall places on 39th between 7th
> > and 8th. My personal favorite store has been having a "going out of business
> > sale" for the past 3 years...there is one store that sells nothing but 100%
> > linen and they have some neat finds. of business 

> Susan
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