The role that thermo-viscous effects play in the propagation of finite level sound in a waveguide has been reexamined from a fundamental perspective. In the past, nonlinear acoustic interactions have been described by energy conserving modulation of spectral amplitudes as wave packets travel axially down the waveguide. To account for thermo-viscous effects in this modulation, investigators have included without formal justification into the modulation equations dissipative terms with a magnitude corresponding to the Kirchhoff rate of attenuation encountered in linear theory. In this investigation, the problem of the propagation of finite magnitude plane waves is analyzed in a different manner. As opposed to previous investigations, all three modes (acoustic, vorticity, and entropy) are considered from the outset. The boundary conditions are extended to include vanishing normal and tangential fluid velocity, as well as vanishing fluid temperature perturbations. A new solution at second order is presented (second order being the first correction due to nonlinearity), which is uniform in the spatial variables. As a consequence, it is shown that the thermo-viscous effects are incorporated into the spectral amplitude modulation equations through one of the boundary conditions. These modulation equations apply to both plane and higher-order modes, including the region arbitrarily near the cutoff frequency for the higher-order modes. It is shown that the small parameter 1/(N)1/2, where N=ρ0Dc/μ (the acoustic Reynolds number), is a special scale for analysis of nonlinear interactions in a waveguide. In particular, the relative magnitude of the sound source and 1/(N)1/2 is a determining factor that predicts whether nonlinear interactions will be significant.