Just wanted to finish the thread off here by saying I finally have
working code, accomplishing my task of utilizing File.exists? and
eliminating my loop issues.  For the sake of my own
self-aggrandizement I'll post the code (open to criticism or comment)

Dir.chdir 'C:/testfilesmoved'

require 'ftools'


pic_names = Dir['C:/testfilesorig/*.*']
destdir = Dir['C:/testfilesmoved/*.*']

pics2bmoved = []
pic_names.each do |name|

      puts 'Do you wish to move ' + name + 'file?,"yes" or "no" ?'
      decision = gets.chomp.downcase

                  if decision == 'yes'
                    if destdir.empty?
                      pics2bmoved.push(name)
                      else
                    if File.exists?(destdir[name.to_i]) == false
                        pics2bmoved.push(name)

                        else
                        puts name + ' already exists in destination,
overwrite? "yes" or "no" '
                        ow = gets.chomp.downcase

                          if ow == 'yes'
                           pics2bmoved.push(name)
                            else
                            puts 'This ' + name + ' will not be moved'

                    end # ow == yes
                  end # File.exists?
                end # destdir.empty?
             end # decision == yes
           end # for pic_names loop



                   if pics2bmoved.empty?
                   puts
                   puts 'No files will be moved'
                   else
                     puts
                     puts 'These files will be moved'
                     puts pics2bmoved

                  end