Checked again to see if wheels where properly in the forks and I believe the front wheel may not have been fully in. Read somewhere that it is a good idea to install wheels with bike on ground to avoid that happening and I had done it while the bike was in the rackstand. Not sure if that has solved the problem as I work in the basement and did not have time to lug the bike outside yet.
In regard to the shifting problem I notice that the chain does have a degree of wear but it is slight. I bent the guard away from the chainring a bit and I also re-seated the rear axle in the dropouts. With the chain on the middle cog I was able to consistently shift back and forth between the large and small chainrings without any derail to the outside or inside. However, when I put the chain on the smallest cog and tried shifting the front derailleur it ran off the large ring again to the outside after a few tries. I am wondering about the seating of the rear axle in the dropouts. Because of the way the derailleur butts up against the hanger bolt in order to have the wheel centered between the chainstays the left side of the axle is very near the limit of the drop out slot instead of seated back to the rear.

In regard to the checks for straightness I am sorry now that I did not perform them more thoroughly when I had everything stripped down to the frame. All I can say is that things looked straight visually. As an artist I have a pretty good eye for such things but perhaps that is not enough.