Alan, Randy,
Thanks for your quick replies. I was sure that your suggestions would solve my problem, but alas they did not.
I found a length of clean electrical wire, and sent it up the steam wand as far as I could, and there was no obstruction there.
Also, I got a clean squeeze bottle and tried to force water through, the interesting thing here is that even with a great amount of pressure applied by me to the bottle, I was not able to force any water up the hose, it was as if I was pressing against a solid blockage.
This was true both with the pump on and off, both with the steam wand knob open and closed.
The hoses in the machine are all clear plastic and they do not look blocked to me at all. The pump itself does make a loud sound, so something in there is working.
The pump and mechanism is all fully accessible, but I'm weary to disassemble it (even though I'm technically inclined). This machine was purchased in May 2007, hopefully it is still under some kind of warranty. Guess I'll have to wait until Monday to speak with Saeco's 1-800 number.
I'm at a loss.... I still don't understand how this could have happened.

Any other suggestions are welcome.
G