Thanx for the replies so far guys but I still have the problem...

First ... I have saved the .obj model as a prop and loaded it (and tried many other permutations) but the problem persistes.

Second... I was already pretty confident that the problem had nothing to do with group normals. As noted above, the problem only occurs when the prop in question is the only object loaded into the scene. If I add another prop or a figure to the scene then the problem goes away.

Very curious to say the least :)