This bug cost me half a day and a lot of headache. I finally tracked it down to a point with a particularly long description. I noticed that with the default point description field size of 32, the max allowed length of a point description is 22. Longer descriptions cause AutoCAD to go to la-la land when you try to build the surface. I was able to use point descriptions up to 30 characters in length when I created a test project with point description field size set to 44 instead of 32, but did no further testing.
Maybe I should note that it is OK to have points with long descriptions in your project, as long as they aren't in the surface you're trying to build.
I probably should note that I'm using Land Desktop 2004 under Windows XP.