I just followed the inDesign Secrets step-by-step solution for setting a number-list style for this purpose. When I started typing a caption in this new style, BANG, the word 'Figure', followed by a space, a number and a space, appeared perfectly. All went well until my caption length exceeded the width of the text box. At that point the wrapped, overflowed caption overlapped the first line, resulting in unreadable text.
Style of figure-number list is based on standard text, which wraps just fine by itself. I must be missing some added formatting in the numbered list. Can anyone help?"
Believe this is now OBE. Seems to be working normally.