When I removed the LoopMode code and regenerated with PE, the error code disappeared. However, the receiver does not transfer data from the PC even though it is responding to receive requests (particularly TXBufferFull events).
The transmitter is only able to send one byte, and then stays in an error mode. Apparently, the ASerialLDD library functions are not working.
This situation is not reversible, as attempting to bring back LoopMode causes the error to return. This, in turn, prevents PE updated code from being generated, so whatever got screwed up in the environment stays irretrievably so.
This is the result I see on the scope. I should generate 11 bytes of binary data.

When I looked at the results coming in on the _RecvBlock function, the were both 0. The interrupt indicated that it received two bytes, which is what you see here, but couldn't transfer the byte values.