The Rockville couple strolled into Lou Masi's Funhouse with a definite idea of what to purchase for a friend's 40th birthday party. "We're looking for a gag gift," Harry Williamson said, staring intently at the man behind the counter. "Something truly vulgar."

At which point Lou Masi went to work. Bypassing a glass case full of joy buzzers and whoopee cushions, the shopkeeper started pulling out racy items from a nearby shelf with the exuberance of a circus showman.

A dozen novelties later the Williamsons settled on a $3.95 set of peculiar underclothing that made their eyes sparkle with mischief. "Oh, he'll like that," Helga Williamson said.

"Perfect," her husband declared.

"See, just give me a little time," the shopkeeper said. "I can satisfy just about anyone."

Lou Masi's Funhouse is a little shop of humor that has become something of a neighborhood legend in its six years of existence at Aspen Hill Shopping Center in Wheaton. According to Helga Williamson, "You can't go to a party around here without finding something from this place lurking about."

It's also a very strange place. If a movie were ever made there, it might be called "Night of the Laughing Dead," for you can get everything from chattering teeth, kazoos and nickels that squirt water to a full-length Dracula costume, replete with fangs, cape, vampire ears and a tube full of imitation blood.

You can also send a telegram at the funhouse, which, outfitted with a computer and clattering teletype machine, doubles as a certified Western Union branch office.

All this was the brainchild of Margot Masi and her husband, a 54 year-old former band leader who came in from the cold a decade ago when the big band sound died down.

"If I hadn't gone into this, I'm not sure where I'd be now," said Masi. "All I've ever been is a showman."

For sixteen years, from the late 1950s to the early 1970s, Lou Masi was a familiar music figure at Washington's Shoreham Hotel during the heyday of ballroom dancing. A saxophone and flute player, Masi led background jazz and swing bands over the years for performers as varied as Marlene Dietrich and Diana Ross and the Supremes.

He also performed at every inaugural ball from Eisenhower's to Carter's.

Masi's was an era, he said, "when hotels and nightclubs in town always had the best."

At the peak of hotel music in Washington there were four ballrooms at the Shoreham alone, he said, replete with bands and entertainers.

" It was like this," said Masi, a short and jolly man, gesturing with his hands. "I'd take a break from the stage and sit in the lobby. Mark Russell would be in one room, hamming it up, and a swing band in another. I'd see an old man come by walking his dog. That was old Senator Byrd. He lived there.

"Over the years I'd see LBJ dancing and Nixon popping his fingers, senators juicing with the chicks, and John Kennedy courting Jacqueline. I got an autographed baseball from Joe Dimaggio and met Mantle and Yogi Berra . . . . Everybody who was anybody was there and I was right in the middle of it."

Which wasn't too shabby, he went on, for a New York City boy who grew up listening to Count Basie and Harry James, took his sax on the road when he was 17 years old and played in almost every hotel and night club from here to St. Louis. By the time he was 29 Masi had ended up in Washington playing for the Bob Cross Band at the Shoreham, where a few years later he met Margot, a German-born woman who worked as the secretary for the hotel's maitre' d.

"I remember once I went into that Peoples Drug Store at Connecticut and Calvert and there she was at the check-out counter, my idol, Marlene Dietrich," Margot remembered. "I went up and introduced myself and told her how much I admired her. Then I happened to mention in passing that I was in charge of taking reservations for her act at the Shoreham.

"Well, Marlene Dietrich put her arm on my shoulder and said in that husky voice, 'How are we doing for Monday, dear?'-- as if she needed to be told that her show had been sold out for weeks!"

In 1971 Lou Masi took over the Shoreham's Blue Room band, and dubbed it "Lou Masi's No Generation Gap Orchestra." But it never really had time to fly.

Two years later, after performers had priced themselves out of the hotel market and the hotels focused on grabbing conventions over entertaining, the Shoreham was sold to American Airlines and the era of big ballroom bands in Washington officially died.

"You could see the handwriting on the wall, as far as music was concerned," Margot Masi recalled, "so we looked around for a business to get into."

They purchased a tiny kiosk in Rockville Mall eight years ago known as the Magic Trunk. Masi renamed the place Lou Masi's Funhouse to lure visitors who might have recalled his days at the Shoreham and the two of them expanded the line of magic merchandise to include all kinds of novelties and theatrical goods.

While Masi's friends in the band became used car salesmen and real estate brokers--"anything," he said, "to make a buck"--he and his wife traveled to trade and commercial shows from New York to New Orleans to pick up such arcane articles as belly-dancer G-strings, wolf man whiskers, fake hard-boiled eggs, garlic chewing gum, insect earrings, dribble glasses and tubes of bourbon-flavored toothpaste.

Today the Funhouse, which moved to 13603 Connecticut Avenue six years ago, is a treasure trove of oddities.

"I'm still in show business," Masi said. "It's just the applause ain't there. My calling is to make people happy."

Like the Samoan gentleman who walked into the store several years ago, said he was running for reelection back home and needed a bunch of booster buttons for his campaign. Today, thanks to the Funhouse, Masi said, there are buttons and bumper stickers all over that island nation imprinted with the words, "I Love Samoa--Courtesy of Congressman Fofo."

Despite his wife's desire for Masi to quit music altogether, he still has his band listed in the Yellow Pages and occasionally performs at weddings and other special occasions.

Still, he has had to come to grips with the fact that in many ways he is better known in the Maryland suburbs as the owner of a peculiar shop than as a big band musician. "A few months ago this guy came up to me at a wedding where I was doing a gig and said, 'Gee, Lou Masi! I know that name.'

"So I says to him, 'Well, I was kind of a popular guy during my days at the Shoreham, you know, got written up in the newspaper columns quite a bit. He says, 'No that ain't it. Now I remember! Lou Masi's Funhouse in Wheaton, right?'

"You could say I had mixed emotions about that," Masi recalled. "Kinda like the guy who sees his mother-in-law go over a cliff in his brand-new Cadillac. I didn't know whether to be happy or sad."