Thanks to all you that have replied. I have also used the serial library extensively in the past and not seen anything like this. When I get to the bottom of this problem, I will let you know what I find-even if I am doing something embarrassingly stupid. But for now I have added a workaround.
The development board I am using has a Xilinx FPGA with an internal Power PC core. That is the device sending the serial data over a configurable UART. Perhaps there is something at the low level that is adding the character, but for now i don't have time to investigate. Again thanks to all for taking the time to consider the issue.
