Hey Mike,
This is a quirky problem, and I've encountered it myself. What is even stranger is the resolution. All you need to do is add an empty layer underneath the layer that you already have.
Here's what I did to fix your file:
- Opened it with MMF2.
- Clicked on Frame 1.
- Pressed Alt+K to open the Layers Toolbar.
- Added an additional layer.
- Dragged the new layer so that it was "beneath" the layer with objects. The objects layer now should be #2 and the empty layer #1.
That's it! You won't need to uncheck "Handle background collisions even out of window."
I've attached a fixed file.
Jess