Sorry slow to reply on this one, Bob and a belated welcome.
Don't have CS3 installed yet, so I'm shooting from the hip here...
You might try adding a
File > Close as the last step in the action. Usually not necessary, but worth a shot.
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Plan B:
If you haven't yet, check out Dr. Brown's 1-2-3 Process Script
http://www.russellbrown.com/tips_tech.html
It's very similar to Image Processor (an upgrade to the CS3 edition, if you will) and I've read has some improvements. Maybe it will get you over the hump.
Tutorial:
http://av.adobe.com/russellbrown/1-2-3_SM.mov