Hey guys thanks for the responses.
I have Patch 1.02 the latest. It is PC CD-ROM Also it is a legal store bought copy. Actually, I played this exact battle before and the exploding buildings and troops only happened after I tried to restore a saved game and try again. The reason, I was just too good and took out the Isengard Citadel in 20 minutes flat. It is very strange because I was able to build a second citadel at an outpost and that was destroyed too.
One thing I did do after installing the game was install Windows XP PRO upgrade from XP HOME, reinstalled the Audio Drivers and installed Windows Defender Antispyware. It could be the spyware, I am going to turn it off and try again.
Sauron getting the ring back? Well, maybe, I did choose to send Eomer and Rohirrim to Westfold, maybe I should send him to EastFold where Lurtz is nearby. By doing so, he may be distracted, have less Uruks to send to Amon Hen and Frodo can escape. IT would make sense, however, it doesn't explain why I could play this battle before.