The problem was a concurrency issue.
The change of the stored procedure has been in production now for a few days and no problems; interesting fix one thinks. Apparently both versions work.
But, I just reviewed the code again that checks for a single instance of the application and it was moved to after this stored procedure call. Arhhgg! Concurrency issue.
Sorry for the trouble and thanks again for your help.
ps. Just one interesting thing... why couldn't I reproduce the concurrency problem within SQL Server Management Studio as per my comment above? That interleaved perfectly with the newer DateAdd format.