ok, I spent a good bit of time chasing this one down.  the conclusion I’ve come to is that there’s a bug in the “debug” version of the Flash Player 7,0,19,0 that makes it impossible to use SetVariable to communicate between JavaScript and Flash.

With Flash Player 7,0,19,0 _debug_
I can get SetVariable to work in Internet Explorer 6.0..
I can get SetVariable to work in Netscape 7.1
I can’t get SetVariable to work with Firefox 1.0

a couple of other folks who wrestled with this..
http://www.markme.com/teammmflash/archives/005316.cfm (last comment)
http://www.flashsupport.com/forum/topic.asp?TOPIC_ID=1133 (post from dj_roeeze - note that he found that getting a different version of the FP fixed it.. )

Once I un-install the debug Player and install the standard Player my SetVariable code works just fine in IE, Netscape, or Firefox 1.0.  Wee.. 

If this isn’t the case.. and you are able to get SetVariable to work with the debug version of the Flash Player while using Firefox 1.0.. please comment.

((note.. see my comment from April 26th for a solution))