Thanks for your reply. That is what I did, and it still shows as installed. Just did it again with the same result. Clicked on Purchased with and without option key. Same result.

Restart your Mac, and check in the App Store again.

Do you possibly have a backup connected to your Mac, and the same app is on that backup? The app store may find other copies, and call it installed, even though on another drive or other partition. Unmount and disconnect all external storage, and the app should show properly.

If that all doesn't help, maybe it's a problem with the particular app that you have…
Can you tell us which app?

Ah, good. Don't know for sure which thing did it. I deleted the app. Emptied trash (as I had done before). Rebooted mac. Unmounted the time machine and another disk where I had archived the app. At that point App Store allowed me to "Install". Oddly, remounting the other drives still allowed me to Install. Restoring the app made App Store recognize it as installed again. So, not sure if unmounting or rebooting or both was the trick, but now I know how if I need to do it again.

Thanks!

Unmounting the (non-Time Machine) drive where you had a copy was probably the crucial step. I tried it with a small app on my 10.6.8 machine, and found it worked while my Time Machine volume was still mounted and the original copy was still in my non-emptied trash.

The App Store app (and now Software Update) looks for existing copies using Spotlight. It apparently weeds out anything it finds in trash or TM, but I know from experience that it will update copies on other volumes if it doesn't find one on your boot volume.

Once you get the "Install" button enabled, clicking it re-installs the app, but the button does not change appearance to reflect that until you go to another pane and come back. I had to keep a Finder window open on /Applications to satisfy myself that it really was reinstalling the app.

Amen. I have to agree. Downloading from the App Store is a huge pain. That is a huge reason that I've only purchased one app from the app store.

I am so happy that a good number of developers are either choosing to offer non-App-Store versions alongside their App-Store apps, or fore the App Store entirely.