3speed

He could also find a cheap derailer, replace the cable itself, and put on a new chain. All things that Could be related to his problem, and each costs less than a new freewheel. But in the end he's going to end up spending a lot more following that logic. I think the freewheel seems like the most likely cause, so I say start there.

r0ckh0und 

+1 Squirt some lube on the jockey wheels and check them for grime build up.

auchencrow

Yup. The chain could definitely be a contributor and it's best to change FW and chain together anyway if there is wear.

soonerbills - The "large-large+2 link" chain length method has always worked flawlessly for me: I.e.,
Route the new chain over the large chain wheel and largest cog, but NOT through the rear derailleur.
Allow two extra links and break the chain right there.

soonerbills

Checked the chain for a onus link and found none... all are free and in good condition. I guess I need to invest in the new freewheel for this set up as shortly it's going to be moved to another frame that suits my son along with all the other components. I have bigger plans for this Traveler but was wanting to iron out all issues before the swap. I did not know that SIS vs regular cable was such a thing! Thanks for the info. As for the freewheel on further inspection I can see good wear marks on the cogs and I notice a little wobble play in the freewheel itself. I have always had friction and this is really my first serious in depth foray into SIS. It's good because I have intentions to go with full STI on the Trek and I need the learning curve. This bike will end up with a friction barcon based system but I digress... So I guess the Light action will more than likely be alright and the answer is somewhere within the items you all have brought to light. And proper adjustment. I want to do some miles on this bike this weekend and hope I can get this taken squared away.

soonerbills

Ok here's an update to the issue.
I took the advice and replaced the freewheel with a new one. The lbs had a nos Shimano HG with the original range and it was only 18 bucks so that was cheap enough and without knowing how many miles the original had was reason enough to swap it out.They also set me up with some of the SIS cable so I replaced that as well for the generic cable and housing I had on the bike. Finally I lengthened the chain 2 links. I did need to readjust the derail a little but now the shifts are perfect and clean. No skips or any of the other bs from before.
I took the bike for a 30 mile shakedown and after a couple of adjust on the fly I can say this Light Action seems pretty competent, a lot better than I thought it would be after hearing all the trash talk on them in other forums. Thanks for all your help!