I confirmed through experimentation that the request doesn't reach the license manager. I can see where I start LDC 2009 but nothing shows in the log files for the times I tried to start C3D 2013.
It did help some. I now have more information from the error dialog:
So running the Cascade Hotfix must have done something even though it errored out. The software is now looking for a IDSP 2012 license instead of a Civil 3d 2012 license. This is important information. So it looks like it did help a lot.
That was the final clue I needed. Since it was now looking for a 2012 IDSP license. I pointed FlexLM to the new IDSP 2014 license instead of the old Civil 3D 2012 license. I can now start Civil 2012.
So even though the Cascade Hotfix errored out. It did do what it was supposed to. The only question is, "Why didn't it work on the original installations of Civil 3D? Why did I need to reinstall Civil before it would work?" I know these questions will probably never be answered. But at least I have a procedure now if others have the same problem.
I bet that the AeccCascade.cab file it was looking for is in an IDSP 2012 deployment.
Thanks so much for all your help.