Hi Michael,
Another way to rebuild the search index is to delete all the files located in the index folder /Data/Sites/1/index
Then next time you do a search it will see no files so it will try to rebuild the index, as long as file system permissions are correct it should re-create new index files. It can take several minutes for it to do the work and you should be careful not to recycle the app while it runs.
My guess is something got funky with file permissions so it cannot delete the index files when you click the button to rebuild the index and this may mean it won't be able to re-create the index until file system permissions are fixed.
Hope it helps,
Joe