thank you both for your input, and your patience! i really appreciate it. i would not have been so involved with this mess but i am donating 100% time and 100% material to a ww2 90 year old female vet, so thanks for your patience and helping me solve this. very few ever give back, so your helping me give back to her! thank you!
i just need to be absolute sure when i do this, regardless of the inspectors as they can seem to make up there mind.

i talked to one the ahj or inspectors,
he said 200 amp breaker box outside house for the main conductor coming in/main disconnect, nothing else in the box just for the main conductor coming in and going into the terminal box in the basement.

he wont let me run 3 feet of sec in the basement and install a main breaker in the basement, my argument was all the area houses have 2-3 feet of sec into the house and then a main breaker box, he said thats not protected it might be the normal way, still not right. he said "this is not a normal main conductor to breaker box set up"

he said then you can route your wire in pvc protection from the main outside breaker disconnect there, to the terminal box, then you can feed the house, garage and apartment above garage off that, as long as your grounded and bonded and protected in pvc.

he said that 2-5 feet of sec to a main breaker box is the norm, but he does not like unprotected wire. ok i can see that the main line in goes to the house outside, 200 amp breaker protected, then to the terminal box in the basement, still protected by the main breaker, the feeders (house, apartment, garage) are reverse protected back to the outside breaker.

ok so whats wrong with this picture? anything?

the other inspector said you can do all the above, except if you run 22 inches in side the basement into a main 200 amp dedicated breaker mounted on the wall i will allow it. ok so 22 inches of wire is still coming in the house and this would be so much better and easier then trying to bend wire at 10 above. he said that since its under the house its considered outside according to nec 2005 code. i know it seems like i am asking the same question, but whats your suggestions?

thanks for your help
jake