fairly simple schema is still driving me nuts. HELP.

I am still struggling with a schema I generated from a UML model.
I have posted this before and gotten some help with it but have not made significant progress.
Thinking I was using the spec elements in ways they were not intended, I have rewritten
the schema from scratch using XML Authority to see how it chooses to code the schema.
XMLAuthority v2 validates this schema as OK, so does XMLSpy v3.5.  
 
I am trying to imlement UML type one to many associations with elements that
can be subclassed.   Frustrated at the progress I made with even a fairly simple
model, I have reduced it to an extremely simple model: one class (Vertebrate)
that can prey on a list of other Vertebrates via an association called PreyList.
 
Here is the schema (Vertebrate.xsd):
 
<?xml version = "1.0" encoding = "UTF-8"?>
<!--Generated by XML Authority. Conforms to w3c http://www.w3.org/2000/10/XMLSchema-- <http://www.w3.org/2000/10/XMLSchema--> >
<xsd:schema xmlns:critters = " http://www.sas.com/Critters <http://www.sas.com/Critters> "
  targetNamespace = " http://www.sas.com/Critters <http://www.sas.com/Critters> "
  xmlns:xsd = " http://www.w3.org/2000/10/XMLSchema <http://www.w3.org/2000/10/XMLSchema> "
 
  version = ""
  elementFormDefault = "unqualified"
  attributeFormDefault = "unqualified">
 <!-- edited with XML Spy v3.5 NT beta 2 build Dec  1 2000 ( http://www.xmlspy.com <http://www.xmlspy.com> ) by Michael Burns (SAS Institute, Inc.) -->
 <xsd:complexType name = "VertebrateType">
    <xsd:sequence>
     <xsd:element name = "PreyList" minOccurs = "0">
      <xsd:complexType>
       <xsd:sequence>
        <xsd:element ref = "critters:Vertebrate" minOccurs = "0" maxOccurs = "unbounded"/>
       </xsd:sequence>
      </xsd:complexType>
     </xsd:element>
    </xsd:sequence>
                  <xsd:attribute name = "Name" use = "required" type = "xsd:Name"/>
    <xsd:attribute name = "Bones" type = "xsd:boolean"/>
    <xsd:attribute name = "NLimbs" type = "xsd:nonNegativeInteger"/>
    <xsd:attribute name = "LimbType" use = "required">
     <xsd:simpleType>
      <xsd:restriction base = "xsd:string">
       <xsd:enumeration value = "leg"/>
       <xsd:enumeration value = "wing"/>
       <xsd:enumeration value = "fin"/>
       <xsd:enumeration value = "none"/>
       <xsd:enumeration value = "mixed"/>
      </xsd:restriction>
     </xsd:simpleType>
    </xsd:attribute>
 </xsd:complexType>
 <xsd:element name = "Vertebrate" >
  <xsd:complexType>
   <xsd:complexContent>
    <xsd:extension base = "critters:VertebrateType">
     <xsd:sequence/>
    </xsd:extension>
   </xsd:complexContent>
  </xsd:complexType>
 </xsd:element>
</xsd:schema>
 
 
Here is the very simple instance (VertPreysOnVert.xml):
 
<?xml version="1.0" encoding="UTF-8"?>
<!-- edited with XML Spy v3.5 NT beta 2 build Dec  1 2000 ( http://www.xmlspy.com <http://www.xmlspy.com> ) by Michael Burns (SAS Institute, Inc.) -->
<Vertebrate 
   xmlns="http://www.sas.com/Critters" 
   xmlns:xsi="http://www.w3.org/2000/10/XMLSchema-instance" 
   xsi:schemaLocation="http://www.sas.com/Critters Vertebrate.xsd" 
   Name="MarshHawk" LimbType="wing">
 <PreyList>
  <Vertebrate Name="Mickey"/>
 </PreyList>
</Vertebrate>
 
Like I said, XMLSpy and XMLAuthority both validate the schema fine.
However, XMLSpy, XSV and Oracle's schema validating parser all agree
that <PreyList> does not belong as a contained element inside <Vertebrate>.
XSV says: 
- - - - - - - - - - - - 

Problems with the schema-validity of the target


file:/C:/ModelCompilerTestPen/test/critters/XMLauthority/VertPreysOnVert.xml:4:2: Invalid per  cvc-complex-type.1.2.4 <http://www.w3.org/TR/xmlschema-1/#cvc-complex-type> : element {http://www.sas.com/Critters}:PreyList not allowed here in element {http://www.sas.com/Critters}:Vertebrate: 

file:/C:/ModelCompilerTestPen/test/critters/XMLauthority/VertPreysOnVert.xml:4:2: Invalid per  src-resolve <http://www.w3.org/TR/xmlschema-1/#src-resolve> : undeclared element {http://www.sas.com/Critters}:PreyList

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Oracle validator says: 
 
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--------------------------------------------------------------------------------------------
Michael Burns                             email: Michael.Burns@sas.com
Principal Systems Developer        home: mburns@bga.com 
Metadata Integration Technology   voice: (512)258-5171x3264
SAS Institute, Inc.                           fax: (512)258-3906
11920 Wilson Parke Ave.        www: http://www.realtime.net/~mburns
Austin, TX 78726-4052            sww: http://sww.sas.com/~sasmkb
   "choose for yourselves today whom you will serve;...
    but as for me and my house, we will serve the Lord." Joshua 24:15