suddenly the file handle is closed

In a modification of Donald Darden's file list code.. debug shows that on the first file of the last directory the program hangs with either no file or stream does not exist.
Anyone get this result? Any ideas?

AppTitle "List all Files to Screen and disk"
;  By Donald R. Darden, 2001
;  This program will print to the screen all the
;  file names found on drive partitions from C: to
;  Z:  With some slight changes it can be modified
;  for use in a Function to locate any directory or
;  file on any drive upon request.

Graphics 1024,768,1
filename$ = "c:\filelist.txt"
fileout = WriteFile(filename$) 
For drive=Asc("c") To Asc("z") 
  folderlist$= Chr(drive)+":"
  While folderlist$>""
    a=Instr(folderList$,Chr$(0),1) 
    If a Then
      folder$=Left(folderList$,a-1)
      folderList$=Mid$(folderList$,a+1)
    Else
      folder$=folderList$
      folderList$=""
    End If
    dirhdl=ReadDir(folder$)  
    If dirhdl=0 Then Exit
    Repeat
      file$=NextFile$(dirhdl)
      If file$="" Then Exit
      If FileType(folder$+file$)=2 Then
        comment$="SDir"
        If file$="." Or Right$(file$,2)=".." Then  
          Goto valid
        EndIf
        folderlist$=folder$+file$+""+Chr$(0)+folderlist$
      Else
        comment$="File"
      End If
	  XText$ = folder$+file$+" "+comment$
      Print XText$
	  WriteLine( fileout, XText$)
      file$=Upper(file$) 
      For a=Asc("A") To Asc("Z")
        If Instr(file$,Chr$(a),1) Then Goto valid
      Next
      For a=Asc("0") To Asc("9")
        If Instr(file$,Chr$(a),1) Then Goto valid
      Next
      Print "["+file$+"]"
;	  WriteLine( fileout, file$)


      WaitKey
.valid
    Forever
    CloseDir(dirhdl)
	CloseFile( fileout )
  Wend
Next
WaitKey
End

Never Mind.. close file is inside the loop.