>*****Rerun the Query -- Should return 0 records*****
>SELECT * FROM test ;
> INTO CURSOR temp ;
> WHERE trn_type = 'ORD' and not deleted()
>****************************************************
>
>messagebox("RECCOUNT = " + alltrim(str(RECCOUNT())))
>
>*****WHY????****************************************

This is producing the query as a filter on the test table.
Look at the status bar message or DBF() result.
In this case, the RECCOUNT() is against the test table, so it is correct in saying 1.