Hi CDI,
With amount of bugs being introduced every day by so much being added, I would guess that this is some type of bug. There are issues with nodes...rendering...texture/material assignment in World UI...just to name a few.  In one bug fix, the atmosphere is "disabled"  "when the sun lamp direction is below the horizon and needs to be recoded". This sound like this may or may not be your issue. I have not tried 2.5 in weeks.

Can read here...
http://lists.blender.org/pipermail/bf-blender-cvs/

I've given up on using 2.5 until it's out of Alpha release and may even wait till 2.6 as some have said they would do also. Mainly because of B_mesh being on hold till who knows when.
If you have personal contact with a developer that is working on this part of blender, I would contact that person, then file a bug report. If your a noob like me and do not have any personal contact with developers, then you may have to wait it out like I am and forget about sending a bug report. There dumping bug reports from new users. I've had it happen to me. I have no idea why? I do know that they are very touchy when asking why!

I truly wish that I had a solid answer for you...I hate it when I need questions answered and can not get any...anywhere.
Have you tried this set up in 2.49b to see if you get the same results? If it's the same, then it may be a carry over bug from 2.49 to 2.50.
Please post back if you get an answer, I am interested to know if it was the atmosphere getting turned off in that "bug fix" that's causing this.