Do you have the same problem when turning MPE hardware off?
No, I have just turned off the hardware accn. and the fades are fine.
Is this because I have a GTS 450 with cuda hack rather than an approved card?
I have also just looked at the exported video file made with the hardware on and this also has the faulty fades, I didn't think the cuda cores had anything to do with exporting.
Is there a way around this problem, I don't think I can work with the MPE software only.
Supposedly, the hardware MPE version of rendering color and opacity is more "correct". Here's some info on why you're seeing what you're seeing. It's from an article by Todd Kopriva for the ProVideo Coalition:
When rendering is done on the CPU with Maximum Render Quality enabled, processing is done in a linear color space (i.e., gamma = 1.0) at 32 bits per channel (bpc), which results in more realistic results, finer gradations in color, and better results for midtones. CUDA-accelerated processing is always performed in a 32-bpc linear color space. To have results match between CPU rendering and GPU rendering, enable Maximum Render Quality.
Some folks don't like the way that looks, which means that while you'll be able to use hardware MPE for editing to speed things up, you need to turn it off for final rendering.