Warren,
I checked further into the issue that we saw with this system and it appears that the problem is specifically with the display. I tried using the same LUT on an image where I used the IMAQ Cast Image where I cast the 16-bit image to an 8-bit with a shift of 4 bits and the display looked as I expected with 0 displaying blue and 4095 displaying red. So the casting method in general works, but it is specifically the casting method associated with the image display that exhibits this problem.
Try using the IMAQ Cast Image function instead and let me know if the problem persists.
Regards,
Scott R.
Applications Engineer
National Instruments
Scott Romine
Course Development Engineer
National Instruments