First I downloaded and installed PdaNet ($35 well spent). But that wasn't the complete solution. I still couldn't get it to work...
Then I found this post on SprintUsers.com by smurs.
1) launch Internet Sharing on the Touch (BT PAN, Sprint Network)So armed with that explanation...I attacked.
2) use my computer to pair with the phone, this process automatically detected a BT serial port on my phone (funny, no activesync port...) and
3) under my bluetooth options in the upper right corner of my mac, all I had to do was select "Connect to Network on SMRS Touch".
This time I started with a clean install of the OS on the n770. (to the mmc card)
1. I started IE on the Touch.
2. Then started Internet Sharing on the Touch. (BT, SprintPCS)
3. Now on the Nokia I added a bluetooth phone (in the control panel).
4...it did the usual handshaking etc. and added the phone.
This part I had done already many times with no success.
5. Now add a connection on the Nokia. I did it manually with name that made sense and #777 for the phone number...everything else blank (no username/password).
6. NOW when I went to select a connection/search for connection, it showed the phone as one of the choices.
7. I had to disable Internet Sharing on the Touch, so that PdaNet could do its job...and it does it quite well. (it would keep disconnecting and popping up weird errors...duh)
I am not sure what I did different this time...maybe it was the reflash of the OS...but it works well!