Thanks Kevin. I logged in as the guest account on my PC (Windows Guest has the least previlige) and surprisingly this account can install packages and read/write files. Both the Admin and User accounts somehow can not access the file system!
I uninstalled R and RStudio. Reinstalled everything. No impact. I rebooted and tried installing the previous version of R Studio. Still doesnt work.
Every other program - Microsoft Office, Sublime Text, NotePad, can all read and write files to the ~/Documents folder and any of the sub-folders.
This is just so weird. I know its got to be something really silly. Oh well. For the moment, I'm going to be using my Guest account for working with R.
Let me know if you have any other ideas for me to try out.