Hi Tom -
This looks similar to what I get when my browser security settings are blocking my ActiveX controls. You might try checking in that area.
When getting ready to compile your help, on the 3rd WebHelp options screen, there is an option to choose either DHTML > Pure HTML, or Pure HTML....and I noticed that if I didn't choose DHTML then I received the same results. So try selecting DHTML and see if that fixes your issue.
After numerous hours wasted I went back to the programmers, who basically fixed it on their end without explanation. O well, at least I learned something and might as well pass it on to the community.