One final observation. I remembered I had not reinstalled the Orchestral expansion, I simply dragged the original folder back from the backup drive. There were no technical issues but I decided to reinstall using the BFD3 only option. The size of the installation for this pack went from 25.8 GB down to 8.68 GB. Its a shame this option is not available with the Zildjian Digital Vault pack because that is huge (and sounds fantastic).
I do not seem to have any distortion issues with the BFDLAC format from the installers, only when I use the tool in BFD3. If one is looking to recover disk space deleting and reinstalling expansions as BFD3 only may be safer than compressing with the BFDLAC tool.
Now everything is working properly as far as I can tell, I won't be messing with it again for a while.