Please help - DynamicMapEnabled causes the base map to not paint properly.

I have a base map (MillersRanch.mxd) loaded in ArcDesktop.

I am trying to add a dynamic layer on top of this.

But as soon as I call

ESRI.ArcGIS.Carto.IMap map = ArcMap.Document.FocusMap;
var dynamicMap = map as IDynamicMap;
dynamicMap.DynamicMapEnabled = true;


The base map does not paint properly.


Here is the scenario I have. I have a base map (MillersRanch.mxd).
Attachment 32256

As soon as I call the above code to enable dynamic views. The ArcDesktop does not seem to paint properly
In the picture below, the pipes and streets no longer paint.
Attachment 32257

And if Zoom further, areas in the base map does not paint.
Attachment 32258

What am I doing wrong?
Is this a bug in the arcDesktop or the ArcObjects sdk?

Any ideas would be greatly appreciated.

I had hacked apart my code. I am not even adding a dynamic layer.
Does adding a real dynamic layer fix this? It did not for me, and that is why I started looking for the minimal changes that cause the painting problem.

This is one windows Server 2012.

Thanks

Attached Thumbnails