After making my repair I thought it might be helpful if I posted some photos of the process, as I'm sure that others have experienced the same problem.
L404 is located on the front panel PCB and is placed between the on/off switch and pin #6 of the microphone.
Here is the general location of the culprit:
...and here is the specific location of L404 and my "repair":
In my case I took a small piece of (blue) wire wrapping wire and wrapped one end around the switched side of the on/off switch bare wire and then wrapped the other end around pin #6 of the microphone connector, then soldered both connections. This solved the problem!
Prior to making this repair I struggled to diagnose this problem because I was running the radio off of a computer power supply (CPS). I read in several places online where people had successfully converted a CPS to use for hobby purposes and even to power radios, but it didn't work for me. As soon as I hooked the radio to the CPS the voltage dropped to <12v and when I transmitted it was in the 10V range--certainly unacceptable for diagnosing audio issues. I thought that might even be the cause of the audio problems, so I finally built a linear PS from a automotive battery charger and had a supply that would yield 13.7v no load, and 13.1v under transmitting load.
With a good PS I could begin trouble-shooting the radio to diagnose the problem. One way I did that was by injecting signals into the mic input using a pig-tail, which worked well, but of course was unnecessary. A DVM was all I needed :-)
Here's a picture of the pigtail:
The other repair I made at the same time was reconnecting the ground from the front PCB to the radio frame. The factory had soldered the ground wire to the frame, which broke loose. I decided to not try to resolder it, but to rather just add a crimp connector and bolt it to the frame.
If you're worried about transmitting with full power during the diagnosis and repair, just remove jumper to lower the power of the rig. This allows you to transmit at minimal power(<1watt?), which may be beneficial if you are using a low amperage PS.
Jumper location on PCB:
Good luck with your repair!!