Problem solved!
For reference, I'm posting what the problem was, and why the fix that was applied has worked.
Initially the 3 optos that locate the head had one that was burnt out, and at least another one that appeared "flaky" in switch edge test.. (flickering).
I replaced opto 2 with an old part I had in stock that checked out as the correct part number. The other two were replaced with new parts that I ordered under the proper Williams part number. When installed, they appeared to work, as they showed up, normally closed in switch edge test, and would open when the beam was blocked.. so it was assumed that they were working properly.
However, upon playing a game to test that everything was working correctly, a ball up the left ramp, and landing in the rear pop up, would send the head into a clockwise spin that would eventually bind up due to the wires wrapping around the spindle that rotates the toy.
Checking to see the relationship of the rear pop up switch and the head, I noticed that switch was adjacent to head opto 1. I also after some more testing, saw that closing the rear pop up switch would change the normally closed head opto 1 to OPEN. So I figured the diode on the physical switch was bad and causing a phantom (closure) opening in this case.. but the diode, wiring and switch all checked out fine. So I proceeded to check the rest of the switches in that row, as well as the rest of the switches in that column looking for other anomalies. and didn't find any.
Next, I decided to check all the adjacent switches to the head opto switches, and found that the adjacent switch to head opto 3 would ALSO change it from closed to open when activated. Head opto 2 had no such problem.
After checking the diodes and wiring and switches on the pop bumper and finding zero problems, I was really scratching my head, and couldn't find anything else that was at fault.
Then I happened to be checking the opto board again for the umpteenth time, and realized that both opto 1 and opto 3 were stamped with a made in Mexico label, but opto 2 had the industry part number on it. Opto 1 and 3 were the new parts ordered under the Williams part number from Marco. Opto 2 was not.
On a hunch, I figured it was possible that the two problem optos were not of the correct spec, as there is some reference to Williams sourcing optos with a HIGHER sensitivity rating and the typical part number has an added designation of .0086 to spec the increased sensitivity. Opto 2 HAD this designation, and optos 1 and 3 had nothing on them at all.
So I ordered two more optos from another parts supplier insisting that I needed the correct part with the increased sensitivity and upon arrival and installation, VOILA! no more phantom switch (closure) openings on the optos when the adjacent switches were closed.
The head works flawlessly in test mode, and I'm happy to say, in the game as well.
Once again, new parts sourced under the correct WILLIAMS part number were sent, but NOT compatible with this game at least.
Lessons learned from this issue? Never assume new parts will automatically solve a problem!
Also, for anyone working on this head assembly in a Party Zone, it appears that if any of the optos for the head are not working, the head WILL NOT WORK properly, even if the head test and switch test says it passes... you absolutely MUST make sure these optos are working FLAWLESSLY for the head to work as intended... There is also another issue where the High Driver board that controls the movement may have issues with the TIP 102 and/or TIP 107 transistors are faulty or even flaky. If you have a problem with the head only spinning in one direction, or inconsistently turning in a particular direction, suspect the transistors on the High Driver board.
In this case, the head would consistently turn clockwise, but at times would pulse only briefly to turn CCW. Sometimes it would turn CCW just fine, and others it wouldn't, but the test said it was OK. Replacing two TIP 107 transistors on the High Driver board solved this problem.
Project and thread closed. Finally!