Bit of a delay as I have not had a chance to test this further.
I have attached a file which exhibits the same issue. In this case the model space objects are not xrefs. It is the the lower viewport of the three which has the problem.
I have tried copying the viewport - no change
I have created a new viewport and set the view the same (by naming the view in the original viewport and setting it in the new one) - this also exhibited the same problem.
The file was in 2007 format. I have now saved it in 2010 format and that didn't change anything either.
It turns out this problem was due to the installation of Nvidias 'Performance' graphics driver for Autocad (nvgl10.hdi). I was prompted to install this the first time I used Architecture 2011 on a newly set up workstation.
Reverting to the standard Autodesk driver fixed the issue (command: 3DCONFIG, click Manual Tune and select Autodesk driver from the drop down at the top).