Posting for the next person who runs into this. It's long and detailed. Thanks and K+ to Colin (aka "Harp") for his extensive Aristocrat knowledge and expertise in helping to figure this out.
Problem:
Keychipped a MK6 CashMan (keychip version 6.02.05), did all the configurations/setups/audit key options etc.. Game looked good, no lockup errors, ready to play. The Bill Validator had the green "landing strip" lights wanting me to put in money. Put money in and it keeps rejecting it as "invalid bill". All the BV limits are good, game limits, the different dollar denominations in the setup are set to "yes".
Ok. So to make sure if it's the BV or not i go into the Audit key options and go to Diagnostic mode and go to BV to do some testing of the bills. I put in a $1 , is shows i put in a $1. I put in a $20, it shows i put in a $20. These are the same 2 bills i was trying in 'live' mode. So i know it's not the BV.
I recheck all the configurations and keychip settings and everything looks good. I ended up keychipping and reconfiguring about 30 times, using different options trying to figure it out.
Have some suggestions about a "sas validation for Bill Validator" setting. Don't see the setting in any screen in the keychip menus or the audit key menus. Nothing i can change.
Solution:
Received a newer version of the keychips (thanks harp) as we were going to try the new keychip against a higher level system/base chip i had also ordered.
I ended up taking the new keychip (version 6.03.04) and tried using it with the current system/base chips i had (vers 1.03.17).
When i used the 6.03.04 keychip i set the target version to 6.02.23 (so it would work with my current 1.03.17 base chips) and in the configuration menu under Miscellaneous there is now a new option that was not there when i used the 6.02.05 keychip. It's "Require SAS to enable Bill Acceptor" and it's set to default of "no". I configured the rest of the machine the same way as the other 30 times, and now it accepts money.
So the 6.02.05 keychip seems to be hardcoding that "SAS to enable bill acceptor" to yes somewhere; as that is not an option that i even see or is changeable in the 6.02.05 version.
The BV not accepting bills could be some of the limit settings or individual bill settings in the setup; or even the dip switches on the BV itself. But in my case those were all correct and it wasn't until i used a new version of the keychip (that 6.03.04 version) that the new option "Require SAS to enable Bill Acceptor" popped up; and the machine is now taking bills properly.
Now the wife is happy she can play CashMan finally