yea, I think that solved the problem. I installed the latest version of Yafray and everything works great now. I am glad I got this figured out. Thanks for the help guys.
lucidMonkey said:
if you can’t get the example file i linked to render then you have other issues.
A big thank you to lucidMonkey for posting his example file 
I finally got HDR to work in Blender thanks to this thread. A note for some who might still have a problem… Lucid Monkey’s sample Blender file does not include the HDR file. You need to download and attach a HDR file for it to render.
You’re welcome!
My file does include the HDR file, you just need to unpack it for yafray to see it… sorry, i did not know that before but it is definately packed. go to the texture panel after world settings panel and you will see a little present looking icon, press that and proceed!
Well thanks again. I didn’t know it was necessary to unpack the images. A noob learns some more 
Then I wonder… why doesn’t it automatically unpack a file used by the scene? Guess it doesn’t matter now that I know.
To clarify, you don’t need to unpack anything if you are rendering with blender internal. With Yafray apparently you do… (i didn’t know either until now)
BTW, blender internal now supports hdr files to some degree (it converts them to standard 8bit image and renders them like it would any other texture mapped to world).