'guess I am answering my own question after fiddling with this some more, for posterity though, might be worth it, anyway, it wasn't an easy week so bear with me.
did not give out the whole story because I thought it's not related.
this is a new machine with new fresh 2012 sp2 installed.
I...
After going through the 5 steps of configuring the Toolbox, it looks like my preferences never get saved. In Design Library toolbar on the right, when clicking on Toolbox, it does say that the "Toolbox" is currently installed in this computer but it is always empty, no fastener or hardware...