Adding NOWAIT tells VFP to continue processing the next line of code after the REPORT FORM command, even though the preview window is still displayed. If you don't have any more lines of code, or very few, the next thing it would do is exit the program and return to the command window. So that explains why you get the command window with the NOWAIT clause.
So now back to your original problem. I've never reun across the problem you explained so I can only offer some debugging options. Trying previewing the report from the Report Designer instead of running it with a REPORT FORM command. If you must run it from your code because of building up some data or cursor, try this trick ... change the REPORT FORM command to a MODI REPORT command. Now run your program which can prepare the data .. then it pops up the Report Designer. Once the Report Designer is up, right-click and select preview.
I do this often because once the error happens ... the Report Designer pops back up but the cool thing is that the property dialog for the offending object that caused the error pops up. This helps narrow down where the problem is.
Cathy