I got a chance to use the utility, and it went without a hitch. Thanks a lot.
But raw shooting woes continue. The only thing I have checked in setting is shoot as raw, include raw in same directory as jpg, and then under dng, to create bad pixel.bin, as I have read somewhere. I hope I read it correctly. The camera proceeded to take a couple of pictures on its own, then came back and said writing of bad pixel.bin failed, and to please try again. I've tried it a few times thereafter, and still failed.
You can shoot DNG 1.3 without needing to create badpixel, although depending what software you use to process the resulting files, you might see the bad pixels.
Images proceeded to be bad still in raw format. jpg turned out ok. but the raw file is distorted, and dis-proportioned in general. and it read the same way view preview and photoshop in Mac OSX. 
If you mean lens distortion, this is normal. The camera does software distortion correction when creating the jpeg. If you want the same correction in a DNG, you have to do it yourself. Generally this is done with a lens profile, which can be created with the adobe lens profile tool if one doesn't already exist for the camera.
You should not expect raw to be a higher quality image that you can just use. It's raw data, which you can process as you choose instead of the way canon frimware chooses. In some situations you may be able to get higher quality, but canons jpeg process is quite good.
when I am viewing it in PS, I would often see a white image with waves of color stripes across the picture horizontally. Rather bizarre.
This sounds like it may be a different problem. If there is no recognizable image at all, then CHDK is probably saving the wrong data to the file. There's a couple different ways this can happen:
1) Raw data isn't available in the shooting mode you are using. On some cameras this happens in auto mode. It also happens in some special low light mode that aren't full resolution (generally an iso3200 or low light scene mode). In this case, every shot in that mode will be bad.
2) The camera uses multiple buffers, and CHDK doesn't always get the right buffer. In this case, some images will be fine and other will be random garbage. It may be more likely to happen if you shoot in continuous mode or shoot quickly. If this is happening, we can probably fix it.
