DannoXYZ-I fele like it's a tad loose because when the cable is shifted into the low-tension position there is a little slack in the cable. I'll use the barrel adjusters to fix once I get things dialed in. Good technique.
JonathanGennick- It attempts to downshift in all gears but the largest/lowest. Brilliant idea about disconnecting the cable and trying it. I'll do that later. As for checking the RD hangar with a gauge, the bike never did this with it's original setup, and i haven't dropped it or banged it since then. So i don't think the hagar could be messed up. That leads me to believe it's the way I set it up, not the hangar. As much as I'd love to blame the bike, I'm pretty sure it must be something I've done.
RetroGrouch-I'll play with cable tension if the above mentioned diagnosis technique shows it to be a cable issue.
griftereck-You figured me out. I popped a 350 on there. You should see those 26X1.25 tires smoke!!! RD is not rapid rise. It's an old mid-90's SLX i believe. It's the RD that came on the bike when I bought it.
Thank you for all the help guys. I'll check the bike when I get home this evening and write back with an update.