I tried to replicate the problem by mounting the grip in several different ways including camera on/off and battery in and out of the grip. I could not reproduce the problem and wonder if there is a fault with your grip.
Thanks for the ideas. I took the camera and grip to a local photo photo store today where one of the guys is long time Nikon guru. Put another grip in the camera, everything is duplicated. So he started looking for settings in the camera. Ended up leaving it there while I went back to work. Returning after work he suggested I take it to Kurt's Camera Repair, a Nikon Authorized Service Center here in San Diego.
The techs there came to the same conclusion, a setting someplace in the menu structure. So I ended up leaving there.
If anyone happens to have any other ideas they would be much appreciated.
I had a look through the camera and MB-D10 manuals but could not see anything obvious. Given the assessment that there is likely to be a problem with menu settings, I wonder whether it would be best to reset all camera menu settings to their default values by doing a two button reset on the camera. You would lose any custom settings you have, but it might be worth it to solve the problem. If that doesn't work, it would almost have to be a fault in the camera.
Incidentally, I had a problem with conflicting settings when I first got my D700.. Nikon service could not solve the problem and was prepared to replace the camera. In the end, a smart young man at the camera store solved the problem for me. In essence, two settings were in conflict, but the requirement to synchronise the settings was not covered in the D700 manual. That could be the problem here.
I will be very interested to hear the final outcome.
Thanks for the help. The camera had been set back to all origanl defaults a couple of times - to no avail. I did get a call from Kurt's yesterday. They confirmed a communication problem from where the external contacts interface with the camera internally. A $338 repair.