I'm still fairly certain this is related to a current Valve vconfig problem.
Michael has been very generous in offering help in resolving this.
Even after removing everything and reinstalling; Hammer will only work for my personal mods, HL2, HL2DM, CS:S, DOD:S and EP1, and for each of those the path window shows when Hammer opens, as it should.
For the SiN:E SDK the path window does not show when Hammer opens.
F.Y.I. - Valve's Mike Durand is taking notes on any known bugs, email@example.com