AM UPDATE: So this morning after checking continuity (board voltages being good) from the board to the magnet, for gits and shiggles I decided to throw a ball in the elevator cradle and fire the game back up. On the second pass, the magnet picked the ball up and dropped it at the completion of the left arm swing. The claw kept going though and after 6 passes, called it quits and threw the magnet broken credit dot. So, obviously its not the magnet, and whatever indicates the magnet is good isn't registering.
PM UPDATE: The ultimate culprit was the Elevator Hold opto pair. I took the elevator assy off (piece of cake/4 screws), with the hardest thing being getting the opto pair connector back down through the playfield. What made this quite bizarre was that particular opto switch was error'ing intermittently, and not knowing the logic of how the elevator worked made it less obvious for me than say someone who owned the game previously.
Bottom line, if you have a bad opto at SW. 74 (ELEVATOR HOLD) the game will throw a Magnet Broken error. Again: The magnet was fine, and now everything works as it should.
I also highly recommend re-flowing all the connections on the board at the bottom of the Elevator assembly. And while your at it, get rid of the Z connector.