Tom,
It seems to work on HDV, but not on DV and it seems DVCPro 50 as well. When I opened a DV clip I got the same TC track options you got. Open HDV and you get the extra options in the TC track. I wonder if it’s a bug?
Are you sure you’ve upgraded to 7.1.6? I upgraded on my macbook as a test, but not on my desktop. I checked QT on my desktop and the property menu in your screen grab looks like 7.1.5.
You’ll notice that I scaled the space where the TC text is displayed. When I first applied the track, It cut off the bottom of the text. The text updates as you play the movie.
In the Movie Properties Menu (CMD+J) you can select the timecode track and it will display TC in a small text on a white strip at the top of the window. This could then be Saved As or Exported directly or for Compressor. However if you scale the movie the TC text will be unreadable.
I’ve had this problem myself with odd frames (and fields) that appear when imported into FCP. It had to do with an effect (in my case, shadow) applied to a layer with several tracks inside or an effect applied to a single track within a layer. I can’t remember which. I discovered that I could export to a Quicktime Movie as a work around. It’s not as elegant as importing the Motion project files.