Okay, I noticed when I render out the comp with the project at 16bpc, there the gradient caused by the spot light is not banding, so that's a plus. However, it still shows as banding in the viewport within AE. Is there any way to ensure the viewport shows the true 16bpc?
Depends on your display adaptor.
As Rick said, depends on your graphics. Inside AE, one potential culprit could of course be OpenGL (...now if that ain't something new *sigh*), so look into that. Other than that there could be a million things going on from hardware acceleration settings to screen resolution vs. color depth to on-screen dithering or the mere fact that most LCDs effectively only are 8bit...
I did turn off OpenGL as noted above, that didn't help. I am using an Apple Cinema Display 27" on a MacBook Pro 17" 2010 model, and really don't see an option for changing the bit-depth settings on System Prefs. My screen resolution is set to 2560 x 1440 which is the maximum allowable on this display. I doubth it has to do with the OS or hardware. Are there any other specific settings within AE that I can try to tweak to troubleshoot?