Hello, please view the link http://logopond.com/img/textwrap.jpg for some reason that I have as yet to figure out text wrap is not locking the text to the object, I can get arround this by simply adjesting the object that I am using as the text wrap border, but its driving me batty that there seems to be some issue with the natural wrapping of text. The red lines you see indicate the gap that is created by some unseen force that pushes the text away from a 0 padding wrapper.
This is just one of those major annoyances about how text wrap is calulated (as Adi says, it is based on the leading slug, so the entire height of a line is pushed). It is most obvious in the case of an elliptical object such as yours.
One solution is to adjust the size of the frame and move the object inside off-center, but that doesn't work if you're cropping an image in the frame. Dave Saunders wrote a script three or four years ago that allows you to nudge the wrap boundary instead. you can find it at http://pdsassoc.com/index.php?Nav=downs&Ban=Downloads&Info=downloads.h tml
Ok, its not that big a deal, I just noticed it in cs6, I've just been creating an empty frame and placing the image offset to the problem area so it appears 'properly wrapped' as in the linked image, I just worry that when I have a more complex shape that I simply want to use its shape as the wrp frame that this may become more of an annoyance, though I guess I could always give the frame some padding then adjust its individual anhcor points... just a bit more work to do I guess, thanks for the information guys. And thanks for the link didn't know this had been going on this long, thought it was a cs6 issue.