"I have even tried manually copying pics off of the sd card to a local folder on the hard drive..."
Then there would be no need to import those photos. Picasa's Import function just copies the photos on the external device to a folder on the hard drive; if that function does not work in Picasa, you can use any other method of transferring the pictures to the hard drive.
I think the problem in Google fixing this is the difficulty in replicating the bug and in pinning down the exact circumstances under which it appears. Personally, I have never see this happen on any of my computers, in any of the many different operating system versions and Picasa versions that I have used, but I have seen it occur on a brand new Dell laptop brought in by a student in a class that I once taught. My hypothesis is that it's caused by incompatibility with one of the device drivers that are interrogated by Picasa right after you click the Import button, in preparation for populating the "Import from" menu.
My suggestion is to bypass the problem for the present and hope that your next computer or the next version of Picasa won't have the same problem.