Originally controlled territory?

@Cpl-Hicks this is why its really cadgy to leave mobility units out of combat for later use/flexibility

No, you are not missing anything. That is a perfectly legal move. I am assuming that the Allies still control Gibraltar, right?

In fact, in your example, since Gibraltar has a friendly naval base (assuming it hasn’t been bombed), the US fleet could go all the way to Sea Zone 95 and park right next to Italy if Italy had no ships there OR they just had submarines and/or transports. Even if Italy had fighters on their air base, they couldn’t scramble because it is the US NON-combat move.

You can basically move your ships to any sea zone you want as long as there are no enemy surface warships blocking your way, or as in your example you have cleared any enemy warships.
Of course, that US submarine would have to remain in the sea zone just east of Gibraltar since it moved in the combat movement.

If the Burma Road is open and Manchuria, Kiangsu & Kwangtung are under Allied control, Chinese units may enter non-Russian Pacific territories (can help clean Japan out of SE Asia and Korea). They are permitted to deploy one transport on the board at a time limited at SZ 20 and it can only move to SZ 36 (let 'em liberate Formosa & Hainan on their own).

either one side says I concede or we take out all the capitols of the respective sides.

As you say, in OOB 2nd edition, West India is Pacific (but not OOB 1st edition).  But more than likely all answers at this point will be addressed as a 2nd edition question, unless someone specifically says OOB rules for first edition.

@otahere34:

This is off subject but has to do with the fact of the U.S. building a minor IC in korea. Can they move within striking distence of that when there not at war even though Japan can not end movement withing 2 zones of alaska or the western U.S.?

Yes.  The United States is only prohibited from being next to Japanese soil in the Pacific.  If they want to leave their fleet next to SZ 6, but not in SZ 6, they may do so.

Wooo! Boys! start loading your American AA Guns into trns and taking friendly nuetrals!

All powers whose capitals are under enemy control work the same way.  If an ally recaptures their territory from the enemy, that ally gains control of the territory until the capital is liberated.  If they simply move into the territory while it is still under original control, nothing happens.  France in AAP40 is treated as a power whose capital is under enemy control.