Ok fixed it by deleting waterdrops2.swf in cs5 importing to flash builder, exporting as catalyst and adding the swf back again in catalyst cs5.5.
Now I have exactly the same problem as here http://forums.adobe.com/message/3740345?tstart=6 where my project appears blank in run_local but fine in a browser.
This is soooooo frustrating
The whole project or just the embedded swf? The sandboxing can be frustrating. Since you have Flash Builder installed, run your project from there and see it produces any error that you can use.
I would also scan through the Flash Builder fourms to see if there is advice on creating locally hosted browser versions.
Ok, I installed flash debug player and ran it through that with no problems. Exported as an .exe projector which gave me the usual warning (do I really want to run this program).
The good thing is, ity works perfectly when running from a CD or USB drive which was my ultimate task.
Thanks for all your help!