>BTW, "Prevent saving changes that require table re-creation" is not related to that particular situation. I verified with the other person and he also has that switch off. So, there is obviously something somewhere that affects one user and not the other when removing a field which has a single index, blocking the field from being removed if the index is not removed first. In my case, I do not experience that. For him, it is kind of frustrating and this requires additional steps whenever we do a deployment.

Try comparing all the SQL Server options for the session with yours. In order to get all the options run
http://www.mssqltips.com/sqlservertip/1415/determining-set-options-for-a-current-session-in-sql-server/