The code I proposed would be the 'official' way to accomplish what you are attempting with IDENTITY sequencing but is a workaround for SEQUENCE sequencing.
You should not have experienced any problems moving from AUTO to SEQUENCE.
This bug was fixed in the main stream (V2) in March 2007 so it should be in V2UR1 but you may want to try upgrading to V2.1.
--Gordon
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