This looks to be a bug within PADS 9.4. The CLASS should be created for you during the ECO process, which in my case is not. If you create the class manually within DxDesigner you can in fact annotate from layout to schematic without errors but, upon subsequent design changes to layout the previous defined CLASS rule gets removed from the pcb design rule........ This does not appear to be a problem with PADS 9.5.
This is related to the order of the Class attribute in the ASCII file, if it is after the net assignment it gets ignored/removed. It is fixed in 9.5 as you have observed.
How to maintain the dxd+pads lib using dxdatabook.. Please suggest on this and also provide the folder structure deials.