To add to the dilemma, when I attempt to add just a listing to the
/Sites/ area, I get the same frozen state. What I mean by frozen state
is that the next web  dialog never appears and the OK button  is gray
almost as if it is attempting to execute the command but is getting
blocked, but I am able to move the mouse and I can select to go to
another place on the site, I simply cannot get these sites to appear in
the SitesDirectory area.

Just confirming that this is WSS v2 (2003).

By the "second screen" I presume that you are templatizing the already
created site. Does it work for some site  templates and not for others?
Are you choosing an out of the box site template or one that was either
captured as an STP or created as a site definition?

Thanks for responding. Yes, WSSv2 (2003), the second screen  should be
the select template, but I never see it. Further, when all I wanted to
do was do an Add Link to site  in the Sites area, I cannot get past the
first screen. The sites are never recorded in the Sites page, but they
do appear in the SQL Database on the Site table. The problem  happens
before I get a chance to select a template. Oddly enough, there was
nothing changed in the system  that preceded these events.

Any suggestions?

I don't have any suggestions but a clarifying question. Are you
trying to create  a new Site Collection from the Site Directory Area or
are you trying to add a link to an existing Web in the Site Directory's
Sites list (should have been called Webs list)? If the later, the Sites
list is just a list so you can navigate just to the list itself and add
a list item from there.

My main focus was to build  a Collaboration WSS site  from my SPS. I
accessed the SiteDirectory Area and clicked on create  and followed the
different dialog pages. Out of the blue this has started to happen, I
get the first screen  asking about the Name of the Site and the URL, the
next screen then confirms my information and asks if I want to associate
this site (typically we do not use these settings) I usually hit  "OK" to
continue. This is where the problem  arises, I hear the click of the
"OK" button, it slightly grays then.... Nothing! I am still able to use
the mouse, I can connect away from this page, but I do not get to the
screen where I select the template I want to use for my new site. I did
look into the SQL Database for SharePoint and when I look at the Site
Table, I can see the site URL is in the cell, but it does not actually
exist on the WSS. However, if I manually place the URL into the IE
address bar with the _layouts/1033/templatepick.aspx at the backend and
I was able to complete the build. So something is blocking my way from
one screen to another.

Hope this clears it up a bit.

Sorry I don't know why this is happening  but it sounds like you may have
a workaround.

What browser were you using when you did this? I've seen similar
"greyed out but not doing anything" issues when using browsers that
aren't Internet Explorer.

I was using an IE browser version 6. The button  did not gray out
until after I clicked on it, almost like it was trying to move on but
was blocked some how.