I remember this problem, but I had this a long time ago, guess it must have been in CS2... Have you updated to CS2.1 (or do you keep it at 2.0 to keep the multiple target morphing, as I hear that was still available there). Anyway, can't remember how I got it to work, sometimes it was like that, sometimes the color didn't change when I changed the color in the color wheel. But I haven't had this problem in ages, so I can't remember sorry (it's probably been fixed since then as this was clearly a bug, never happens in C4 for instance, any reason why you are doing it in C2?).