Dylan shows up to play Letterman with a punk band (the Plugz who later became Cruzados) and it absolutely rips. They never played with him again, but apparently had spent a month or so playing with him at his house.
A good interview with the bass player here talking about how it all went down (from a very good book about musicians who played with him).
On a side note, I saw Bob last night here in Beerville. I loved it.