Final Cut Express malfunctions completely with older FCE projects

Hello,
I have a fairly major problem with FCE (computer and software specs below).  About 3 years ago I edited a documentary in 14 separate FCE projects and saved them with many backups.   I returned to editing this recently and was disturbed to see that none of the old projects will load properly and I tried a number of the back-up copies.  Here's a rundown of what happens --
- Load a project in FCE, first a warning message "The file format of this project is from an earlier version.  Would you like to update this project file?"  The only way to proceed is by choosing "Yes".  There is a further warning about saving all of your old projects if you want to retain the 'older' version formats.
- At this point there are a number of things that malfunction:
1)  FCE has lost the connection to the source files.   This should not be an issue b/c I did not move or touch any source files.
2)  Some projects are completely missing the timeline that was built (kind of important) as well as the canvas.
3)  It appears that when I attempt to reconnect projects to source files the edit points have changed or the project is using the wrong source file.
I'm guessing one possibility is that in the 3 years since I created the original projects I may have allowed Apple to do an update to FCE which caused FCE to become corrupted . . . I can't imagine an update would cause 3 year old versions of projects to fail so spectacularly though.
In the last couple of months I have created and completed a couple of video projects with FCE without any problems.
If you have knowledge about this particular problem, suggestions for solutions or other forums I would be most grateful.  I think it's possible that an uninstall and reinstall might do the trick, please feel free to weigh in on if/how this should be done so that I don't make things any worse.
Thank you!
-Rob
Specs: 
Hardware:  iMac 10.5.8, 2.4 GHz, 4 GB RAM -- Original specs
Software:   Final Cut Express -- Original CD: 4.0  (Purchased from Apple)  Current Version is:  4.0.1 

Hi Al,
Thanks for writing and the suggestions, I appreciate it.   I've got a question and some comments about what I've already tried:
When you say 'Trash the FCE Preferences', should I go to the Preferences panel in FCE and reset everything or are you recommending something more direct like going into the filesystem and completely erasing a FCE Preferences file or folder?
Permissions for all the files are the same as before.  Source files were always read/write for 'user', and read-only for 'group' and 'others'.  
All projects were saved in .FCE format so I can't open them in QuickTime.  I've noted that QT has likely changed so I may experiment with that a little bit.
> 1. Have you moved any files with the Finder that FCE uses or changed names?
I didn't move any source files or anything related to the projects.  I was very meticulous about this as I had to leave the project for some time and wanted to make sure everything was in place so I could re-commence without inconvenience.
I have opened an old project and done a 'Save As' and re-opened.  The only problem is that the problems still remain -- disconnected source files, misplaced edit points -- all the problems that I had before are still there and the project is essentially unusable.
I may have a follow-up question in another day or so, hopefully I can get things working.  I'll need a little time to try all of the options . . . I'm walking on eggshells with this one as I don't want to lose anything or make things worse than they are.
Thanks again for your thoughts.
Best Regards,
Rob

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