Windows XP pro SP2; MSO Pro 2003

the VBA stops with message Error '58' File already exists or
Error '1004' Excel cannot access the file ......

Error 58 should not occur because if CHDir executes control should pass to
runit:, bypassing the 'fs.CreateFolder DR_Name' statement

If I 'step past' this error I get the VBA error message rather than the
msgbox from the error handler

Why do these errors not "trap" to the error handler at oops:?
code:

Sub Button5_Click()
....Dim Stuff...
curpath = CStr(Sheets("Audit").Cells(2, 9).Value)

On Error GoTo oops

'Turn off calculation to speed up processing
With Application
.Calculation = xlManual
.MaxChange = 0.001
End With
ActiveWorkbook.PrecisionAsDisplayed = False

'Get date of recon - used to generate file names being retrieved/saved

strx = InputBox("Date of Reconciliation (e.g. 01/31/03):", "Reconciliation
Date")
If strx = "" Then Exit Sub

'test for directory:
strdir = Format(strx, "yyyy_mm")
DR_Name = "C:\WorkingFiles\FCSRecon\" & strdir

'Set up variables in case we have to create the folder
Old_date = DateAdd("m", -1, strx)
Old_dir = Format(Old_date, "yyyy_mm")
Source_Name = "C:\WorkingFiles\FCS_Recon\" & Old_dir

Set fs = CreateObject("Scripting.FileSystemObject")

On Error GoTo mk_dir
'If we try to open Directory that does not exist, we get an error _
- this forces to location where we create the directory should that
occur

ChDir DR_Name 'We'll get an error here if the directory does not exist

GoTo runit 'If we don't get an error, bypass the create directory code

mk_dir: 'This is where we come to build directory if it doesn't exist
because it gave _ - us an error when ChDir
Err.Clear

fs.CreateFolder DR_Name 'Create the directory

runit: 'If the directory exists we come here to run file generator for
FCSRecon.xls

'reset On error
On Error GoTo oops

......Code.....

Exit Sub

'Error Handler
oops:
Select Case Err.Number

Case Is = 1004 'Unable to access file
Err.Clear
k = MsgBox("I was unable to find one of the files I need. Please verify
required file names are properly formatted..", vbOKOnly, "Missing Files!")

For i = 3 To ActiveWorkbook.Sheets.Count
If Sheets(i).Visible = True Then
Sheets(i).Visible = False
Else
End If
Next i
Windows(recfil).Activate
ActiveWorkbook.Sheets(2).Activate
ActiveSheet.Range("A3").Select
Exit Sub

Case Is < 1004 'Any other error
k = MsgBox("The following error occured.. Please try again.." & Err.Number
& " " & Err.Description, vbCritical, "Error Message!!")
Err.Clear
For i = 3 To ActiveWorkbook.Sheets.Count
If Sheets(i).Visible = True Then
Sheets(i).Visible = False
Else
End If
Next i
Windows(recfil).Activate
ActiveWorkbook.Sheets(1).Activate
ActiveSheet.Range("A3").Select
Exit Sub
End Select

End Sub