Replying to myself, as apparently can't edit my previous entry. As other posts have shown update 11 for CF10 did not provide a solution for all.
It appears that IIS takes control and does not allow the CFM code to execute when using /404.cfm for the custom error page when a missing .cfm page is called. However since it did work for a missing .htm page, I used a call to a missing HTM page to display the custom 404.cfm page, then viewed the source code, copied it and created a 404.html page. IIS then set to /404.html and now get the custom page for both .htm and .cfm missing pages. Obviously have lost any on-the-fly CFM code flexibility, but at least have a page response.
Hopefully Adobe will come up with a good solution to this rather serious bug soon so all of these various work-arounds can be dispensed with.