Thanks Jeff, I am still working through other issues, but meantime I was able to figure out a nifty trick to solve the issue. The problem is either with the screw or the bed hole (at least the top part of the hole). So since the corner clip has two screw holes one to fasten the clip to the bed and other for the spring adjustment, i swapped places. There was still thread on that bad hole coming from underneath the bed, so i just switched the spots around and its now ok.
Here is what I did, unless there is any problems with this, I spoke to Kent on the phone and he didnt see any issue with it.
http://youtu.be/4wETtreFIqg
Since my long very helpful and insightful call with Kent we had worked out some issues. The biggest issue seems to keep rearing its ugly face and thats the Bed Calibration. Step by step through Google Hangout on AIR we were able for over an hour to go through the bed calibration since it was being very difficult on us (adjusting one corner would cause an issue in another corner and so on).
We thought it was all done by end of the call, however returning home later that day I was shocked to find the unit was again out of calibration. Nothing had broke and clips were still on, but the heating and cooling is definitely causing some major issues keeping the calibration to hold.
We have done now calibrations both in a cooled as well as a heated state and still this bed calibration issue keeps coming up. You can find yourself with a perfect calibration and then either after a single print or at least one heatup cooldown period whatever you did will go away.
Given the fact that there is basically little tolerance and that the spacing between the Extruder and Bed has to be a fraction of millimeter, either there is something defective with my Lulzbot Taz 3 or its just not possible to keep such a calibration (either heated or cooled) to stay calibrated.
Here is a video… what is even stranger, was that when running a bed Calibration i would get mixed results, however after clearly seeing my paper not fitting and being able to go under the extruder i was absolutely shocked when I got a good Calibration results. However note that prints printed in the center of the bed looked transparent in the first layer as that i think something is defective in the bed as it warps and the center is pushed up higher since prints even after this beautiful calibration test yielded SMUSHED filament across the bed…
http://youtu.be/ProS5qTl4ZM
Note that the center of the image was very transparent and while its hard to tell its completely flat against the bed. Also you will see a faint ring around the print, that was the loop, and NO i did not remove it, the filament simply would not come out of the extruder since in that area of the bed there was no room for it to come out.

Also i do want to note and state Kent from the support team was absolutely awesome in assisting me, regardless of current outcome, the support team is super knowledgeable and helpful, patient and willing to assist customers.