After much trial and error this problem seems to appear when setting the Spread Characters option in the labeling Placement Properties dialog box and aligning the text using the stacking Label options to Constrain to Center. This is what happens:
[ATTACH=CONFIG]25726[/ATTACH]
When I turn off the Spread Characters option, all seems well:
[ATTACH=CONFIG]25727[/ATTACH]
Adjusting the text spacing using the symbol formatting dialog box seems to be a satisfactory work-around to get the result I want:
[ATTACH=CONFIG]25728[/ATTACH]
so problem solved on my end but I will be reporting a bug to our distributor.
I am not, however, convinced that this explanation is covers it all off since when I bring in the layer as a new layer in a document, the issue doesn't seem to be there initially.