I lost my job in April '08 as a Mortgage Loan Officer and have had to survive on my 401(k). I altimately still had to file BK, Chapter 7 and am now losing my house. I'm trying to find if I can use hardship rules to waive the 10% penalty.

Negative. There are NO hardship withdrawal provisions from a 401K other than to pay for medical costs in excess of 7.5% of your Adjusted Gross Income.

You will have to pay all state and federal income taxes due PLUS the 10% Early Withdrawal Penalty.