I am trying a loopback using Putty on an FTDI board (this one: http://www.oddwires.com/ftdi-ft232rl-usb-to-serial-adapter-module-usb-to-rs232-for-arduino/).

I am not using an Ardiono for the L-B test, just shorting TX/RX directly on the module itself.

Here are my results:
. With each keypress, the RX light flashes once.
. The TX light does not flash at all.
. There is no output in the Putty terminal screen.

Does this indicate a bad board? I have also tried it in Serial Monitor and nothing is echoed back when pressing "Send."

Reason I am testing is because I can not get this FTDI board to work to upload sketches (Verified correct COM port & board selected, drivers installed OK, same ATMega chips can be programmed in my UNO, upload board resets board but times-out giving the dreaded "out of sync" error) so I am beginning to think it may be the FTDI module that is bad.

I have seen several posts that seem to indicate there is a problem with the latest version of the FTDI drivers.
Several people have reported they were able to fix the problem by reverting back to 2.08.24, see the attached post:

http://forum.arduino.cc/index.php?topic=165310.msg1238147#msg1238147

After some investigations with FTDI regarding the issues mentioned within this blog regarding the "FTDI FT232RL USB to Serial adapter module USB to RS232 for Arduino", we have discovered this module is not an FTDI manufactured product, and also utilizes a non-genuine FT232RL USB bridge chip on the PCB. The issues reported here are due to the chip not being a genuine FTDI chip. We have removed these modules from sale on our website.

oddWires respects intellectual property, rely on us to deliver the genuine article.

The modules will work with the previous driver as noted earlier in this post - but we will, of course, accept returns. We are locating an alternative supplier that uses genuine FTDI components.

The modules will work with the previous driver as noted earlier in this post - but we will, of course, accept returns. We are locating an alternative supplier that uses genuine FTDI components.

What the heck? Why is there no link to a driver on this webpage? If there is, it's not obvious. And especially a usable and working driver?
http://www.oddwires.com/cp2102-low-cost-usb-to-serial-adapter-module-usb-to-rs232-for-arduino/
Plus I don't see any links on this thread to whichever drivers were ultimately used, so ? on both counts.

This is MAJOR peeve of mine with about 99% of ebay sites. They sell "stuff", but you're 100% on your own in trying to find the proper support and documentation.

EDIT: now, these guys understand what I'm talking about.
http://www.pololu.com/docs/0J7/all

I bought some CP2102 modules from e-bay a while back, they came with a mini-CD with drivers.
Never had a problem getting FTDI drivers from www.ftdichip.com.
Mine are from late 2010, I've not seen any problems.
I bought some of the oddwires USB/Serial adapters, will have to fire them up & confirm they work.

A little confused. From what I can tell CP2102 and FTDI are totally different things, with different drivers, so I don't understand why you're mentioning them together in the same paragraph.
http://www.silabs.com/products/mcu/pages/usbtouartbridgevcpdrivers.aspx

Also, I've not gotten anything from ebay that ever came with a CD, at least recently. I'll bet you could look at a dozen ebay sites that sell CP2102 adaptors, and not see anything about drivers or actual support. I don't think many of those sellers know anything about what they're actually selling. Like selling jelly beans.

AAMOF, I just received 2 of the CP2102 adaptors yesterday, bought from a no-support/no-docos site on ebay, LOL. As noted, I tracked down the correct driver on my own, and installed. The loopback test worked fine.

However, does it work properly with my Arduino board? --> not hardly. Two problems:

1. the RXC and TXC pins on the adaptor are labeled backwards - depending upon your orientation.
   They indicate the pins to connect to on the Arduino board, not the signal directions on the
   adaptor.

2. the reset feature doesn't work. To upload a sketch, I had to hold down the Arduino Reset
   switch, and release it shortly after the upload had begun.

So, 2 strikes.

The reset pin on the adaptor header is connected straight into the CP2102 chip, so And yes, I have a 100nF cap in the Reset line on the Arduino board, plus a 10K pullup to 5V. I also tried running the Arduino chip at both 5V and 3.3V, plus tried the 2 extra pins on the adaptor header in case RST is mislabeled.

Also, when you look in the Control Panel Device Manager, there is no option available for changing anything on the CP2102 adaptor, such as "set RTS on close", as on regular FTDI cables.

The reset pin on the adaptor header is connected straight into the CP2102 chip, so

Yes, that Resets the CP2102. You need to connect the DTR pin thru a 100nF cap to Reset pin on the Arduino.

I think OP had FTDI module. Oddwires has also posted elsewhere here in the forum that they had a batch of apparently counterfeit FTDI chips, or perhaps chips that only worked with older drivers, and were pulling the modules until they got things figured out.