Thx @Rob I understand more of what "hyphenation exception" means, but am still confused by spash screen shown in my OP. Since the file in question uses my custom dictionary which has been set in Preferences as the dictionary that ID should always use for all docs, I definitely have "hyphenation exceptions." I have words in the custom dictionary such as personal names as well as my own preference for how to hyphenate words that are in the standard dictionary but which I prefer to hyphenate differently. Hence any ID file I create is likely to have "hyphenation exceptions" if such owrds appear in it.

The splash screen seems to imply that the "hyphenation expceptions" in the given file are local over rides that do NOT match my custom dictionary. Is that a correct understanding?  If I simpy apply the "no break" command to the file is that what might trigger this splash screen upon opening the file?

Basically, I have an answer to question 2 in my OP, but not to 1, 3, and 4. An answer to ?3 is really most critical - what does ID do if you answer "Yes"  versus if you answer "No" and what then is changed in your document. (Perhaps it is relevant that I have recently converted all ID2 files to CS6ID and in ID2 I had only used the standard dictionary that ID offers and had added words to it. With the conversion to new software I have also created a custom dictionary by importing my old ID2 dictionary and then giving it a special name and new location on server.)

Thx @Rob I was writing prior post when you were posting. Yes, it seems it can get fairly complicated - thanks for your research. Fortunately for me, I have things set in Preferences that dictionaries are to be used in this order:

Our company custom dictionary (stored on our server so that all work stations use it)

User Dictionary (the Indd dictionary supplied with the software, and I still wish they'd call it something else as it is not my User Dictionary but the one that they supplied and in my case I am choosing to use it as the 2nd authority of how to handle things).

Typically the only local over ride to hyphenation that I'd make in an actual document would be to apply the No Break command. I will also often adjust spacing between words for a few lines of text in a column so that hyphenation and spacing end up the way that I'd like.

Looks like y testing and experimentation might be a bit more extensive than I had hoped. I am beginning to hypothesize that the reason I have never seen this splash screen warning in the past 7 years is that we always had each of our work stations use the User Dictionary stored on local C drive. There are significant advantages for our small biz in having "our exceptions" in our own Company Dictionary on the server so that everyone is playing with the same deck of cards when editing the same file.

Thanks all for your help - as usual this forum is a great resource.

P.S. @ Rob, I see now in your screen image that the zulu.udc dictionary that you created is in 2nd position in the list whereas in my own set up, my Company Dictionary is in first position. It took me a while to figure out that you can click drag to sort the order in which Indd will use the dictionaries. I realize that this brings up yet an other potential lack of clarity from Indd. I have understood that the sequence of the dictionaries means this:

Look for the word in the topmost dictionary: If it is found there, use those rules.
     If it is not found there, go to the next lower dictionary.

In fact, the game might be just the opposite ... meaning the farther down the list the dictionary is, it takes precedence over anything that has come before it.

And in all of this I am not even dealing with a dictionary that has been incorporated into the document file itself. Incorporating it is often suggested if one is sending the file out to a service provider that might inadvertently change the document because of dictionary settings that the servive provider has.

Fortunately, I have never run into problems with this in the past, but perhaps I was always skating on thin ice before.

Message was edited by: Edward_01to add P.S.