Alright here is what I did to fix it. First I went and got two new keys cut by the dealer hoping that would work. It didn't,

so I took followed page 12-9 in the Haynes repair manual. But I didn't take off the steering wheel. I followed the direction in picture 10.9. The key lock cylinder came right out. Took it to a local lock smith and he fixed it. He told me it's a common problem with Toyota. He charged me $35.00. Came home, the cylinder went right back in, no problems.
Well I hope this helps someone like me who had visions of $$$$ flying out the wallet.