James,
I'm still not exactly sure where you are seeing gray. When the control has focus I get a 1 pixel border of the current backcolor, a 1 pixel focus rectangle inside that and then the value that is using the SelectedBackColor.
What color depth are you using? I tried 255,0,0 and 0,255, 0 and just the integer value 1092 and they all work properly for me.
>This is a customer requirement for required fields. I only get the grey background around the characters when I change the backcolors to something other than 255 and the styl is 2 - dropdownlist.