.....And have found my problem and fixed it. This has to do with the course (that specific one) being a legacy course. We have been using moodle since 1.9 and some of the older courses were backed up and hammered...errr.. restored into the new version 3.4.
All works fine with those but for some reason, the course settings had a 2MB limit on the course, so I went to Course Administration> Edit Settings and scrolled down to Files and Uploads to change the value to the desired one.
I hope this helps somebody else. Although I guess my site is one of the few with legacy courses forced into a new version.
J.Guzman