An update on this.
This seems to get around this issue:
- Build Service (without creating derived images)
- Go into the Service Table, then select all of the Service Overviews & close Service Table so that all service overviews are selected. No need to choose a subset, just grab them all.
- Build, selecting only "Generate Derived Rasters"
- Choose the radio button for "Use only the selected raster datasets"
Phil