I knew that some of that was off. Yes I have tray and taskbar loading first. I had always on top for when I was not using xlabel. Do I need to put xtaskbarloadinbox in the xtaskbar rc file?
Do I need to put the hook line in step rc at all?

I am still having problems. Here is the new config.

In xlabel:
*Label VtrayLabel
VtrayLabelLeftBorder 4
VtrayLabelRightBorder 4
VtrayLabelMoveable
VtrayLabelMoveModifierKey "ctrl"
vtraybitmap "systemtray.png"
vtrayLabelX 0
vtraylabely 0
VTrayLabelAddToGroup "100"
VTrayLabelWidth "95"
VTrayLabelHeight "25"
VTrayLabelImage "VTrayBox.png"
*vtrayLabelModuleHook !vTrayHook

In systray.rc:

vtraySettingsCompatibility
systrayX 0
systrayY 0
systrayHeight 26
systrayIconSize 16
systrayIconSpacingX 6
systrayIconSpacingY 0
systrayDirection left
systrayBitmap systemtray.png
systrayBorderLeft 0
systrayBorderRight 0
systrayRememberIcons true
systraySnap true
systrayBordersize 5
;systrayBorderColor ffffff
systrayBorderDrag true
systrayAutoSize
systrayOnAdd !vtrayshowhide 30

Thanks in advance.