Cutout treated as a fill

[steve.ledger]

OK the tropical heat has got to me and I've lost my mind (.. must be useing someones elses?)

Each time I use the ellipse, rectangle or select tool to cut out an object from a bitmap (ctrl+4) the result is treated as a bitmap fill within the shape I just created?? It has the fill object handles and everything. I can move, rotate etc the bitmap inside the shape, just like a fill or clipview.... (no keyhole though)
This is only when running XXP in WindowsXP, not in Vista (I have a dual boot machine).

I've looked for a toggle I may have 'bumped' - but obviously keep missing it

I feel so stupid