Thanks Otto ... The rubber molding is in bad shape (dry rotted and shrunk) .. And does sound like the door may have done just what you stated. Gone in too far and the latch may have rotated and now has the door locked .. but there again I really cant verify that either. I have tried pushing the door in and while trying both handles - outside and inside. But still nothing while hitting the door hard to jolt it open with no luck either.
I'm sure once I figure this goofy thing out I'll have something to report on this forum about to help someone else in the future with the same issue.