David,
The AT&F would only pop up if I plugged in the cable to a different port - so I think just a stray connection voltage would trigger it.
Late last night I ended up testing the one laptop I'd used to connect with pfsense with a second laptop, both running gtkterm (on Xubuntu) and the same serial cable (I'd checked all the pinouts against the 0-modem page link and it matched the other day, then rechecked the 2,3,5 per Eugene's last night and all ok). Anyway, the two laptops connected via the same cable and using gtkterm on both worked fine.. all typing from one machine went to the second while the second would go to the first, I tried with both local echo on/off for both and both settings worked as expected without issue.
So I went back to pfsense with a verified working cable and software setup and still nothing (serial console on pfsense is on). I pulled the video card and the machine wouldn't boot (checked BIOS for possible settings) - threw a BIOS beep.
I'm going to next try a couple of things… While I think I tried the Xon/Xoff you suggested, I'll recheck, then see if my Xubuntu 8.04 liveCD will boot on the machine (128MB) to run gtkterm and verify hardware (if not I'll try DSL, that has miniterm), probably a monowall liveCD, and if still nothing I'll set up a second pfsense box with two network cards.