SO I tried this again,
turned off the secondary audio source and set the first to passthru...
handbrake made it through and I tested the file on my main mac... worked fine....
made popcorn, went downstairs and turned on the film... NO SOUND...
Tried other movies, all worked....
\So... back to the drawing board... visualhub keeps winning this battle.
I wonder if handbrake for windows is more reliable? might try the windows version on vmware fusion