Solved!
After another 3+ hrs of changing field orders, z-order & removing various controls to and looking at other datawindows, I finally found a datawindow with controls that didn't seem to have the problem. I removed all but one DDLB, from both datawindows, saved both under new names, set all of the properties between the two so they matched, exported them and compared.
Other than the name of the control, the only other item that was different was the BORDER property. If you turn OFF the border of a DDLB, the background is adversely affected. If you set it to anything else (we use Box (value=2)), it works fine. Anyone have a clue why border would affect background???? I also found out that it doesn't seem to affect grid datawindows, and has to have Always Show Arrow turned on. (there may be other things that affect it, but not worried about digging them out right now)
Can someone else confirm this? I want to make sure it's not something screwy with my machine, pb setting, or the phase of the moon.
(as an aside - it took 24hrs before my original showed up. This makes it really hard to know if your post was actually submitted or eaten by the ether)