I have a strange problem with PocketWizard II / Nikon SB800 setup, wondering if anyone can advise a next step in troubleshooting.

Fresh batteries - YES
Cables inserted correctly - YES
Same Channel - YES
Physical Obstruction - NO (although steel beams in the structure about 3 stories above)
Radio Interference - Unknown - but I've successfully used this setup in this location no less than 50 times.

PW1 in camera hotshoe
PW2 in flash #1 firing okay
PW3 in flash #2 not firing

PW3 flash #2 flashes when I do a test pop with the unit attached (it seems this would eliminate connection problems?).
flash #2 does not flash when I take a photo - but the other flash (# 1) flashes exactly as expected.

No, not new PW's, have been using this setup for a long time. 
Troubleshooting guides say to update firmware in camera.  Um... likely do need an update, but I've taken several thousand photos with this body and setup.
Batteries were charged fresh - although I guess this could be the first symptom of reaching end-date.
Cables have no outward sign of wear or tear.

Anyone have a suggestion on what to check next? 
Could this be a problem of the flash and not the pocketwizard?  Not the camera is it when it works with one flash and not the other?

I just ran through everything again, and of course in a troubleshooting situation absolutely nothing is wrong.  I'm now charging a new set of batteries for the whole setup that I will swap out.

Good suggection Joanne, I usually shoot in channel 3 but tonight at my location I will try channel 1 or 2 to see what happens.  I have an extra flash and PW that I will make sure is sitting ready to swap out instead of packed their pouches in my bag.

What I have to do now is label every cable and every PW and every set of batteries so I'm more prepared for problems.  So many things could be wearing out including the chargers for the batteries (I rotate through about 46 rechargeable AA batteries).  Maybe batteries that I think are fresh are not holding a charge (but they were new for soccer season!)

Of course, problems never happen in test situations.  Tonight I have 20 minutes to pose a group of six year olds and coaches and take 2 -3 shots of 20 poses.  I come early.  I test everything.  I double test everything.  When I have these problems midway it really freaks me out.  I have backups for everything but it's the time required isolating the problems that happens mid-way.  A spare flash/PW sitting ready will be a piece of mind! 

About a month ago, I had the same issue at night, in the cold (not sure if that makes a difference).  I had a Canon 580EX on a TT5 and I had a Vivitar 285 on a Plus II.  Both were set to channel 2.  I switched to channel 1 and the problem went away.  I don't know why this happened as I haven't had it happen since, and I've used the same scenario many times since (last Saturday I had 3 Plus II, a TT5 and a TT4 set up and all of them firing no problem through a TT1).

Could it be an issue with the flash?  Maybe flash is not charging all the way....or maybe the flash is set to "slave" when it shouldn't be?

That's all I can think of.

LOL....pssstttt...don't tell anyone but you aren't the only one that does this.