Hi Ed, well I'm glad that there is a solution at least and thanks for posting the information for others to use as well!

Is it possible for you to create some simple OBJ file that reproduces the problem like something with just a couple of boxes with different materials on them? If so if you could send that in to KeyShot support to show them the difference in behavior from this version to their previous version maybe that will help them track down what has changed and fix it up to behave like it used to.

Thanks,
- Michael