Hello DannyHamilton,
"A transaction can be sent without fees if both of these conditions are met:
It is smaller than 10 (SI) kilobytes (10.000 bytes).
All outputs are 0.01 BTC or larger. "
https://en.bitcoin.it/wiki/Transaction_FeeAnd yet if you read my post, you'll see that both the input and the output are both significantly larger than 0.01 BTC (1.0301101 BTC to be exact) and the transaction can only have ONE input and ONE output, so there really isn't any reason for the transaction to be larger than 10,000 bytes.
Still the Bitcoin-qt client is requiring a 0.0005 BTC fee. So my question still stands.