I'm having a very interesting problem and can't figure it out.  I'll try to give as much information as possible, so I apologize if this gets long.  Any insight is appreciated.

Currently Running:  Media Composer v3.5.4 Nitris DX on an HP xw8600 Workstation

Our current workflow involves digitizing a full show and placing it on the timeline on the source tape timecode.  We then go through and find cut points to define the elements of the show, ie Cold Open, Act 1, Act 1 Bump Out, a kind of reverse string out.  At this point, we must add fades on audio and video to the end and start of each element.  So when individual elements are scheduled there is visual and audile closure.  The problem is, Avid will not let you place a Fade Out at the tail of a clip, and on the next frame place a Fade In on the head of the next clip.  To remedy this, we split out all of the elements, add the effects, then place them back together (we must keep source tape timecode).  At this point, we then mixdown the audio to create a true mono full mix and send to Transfer Manager.  Here is where it gets strange.  The file output by transfer manager, viewing .MXF's with Sony XD Cam Viewer, displays slipping issues.  If the MXF is imported back into Avid and placed against the original timeline, it becomes obvious the video track slips a frame or two with every effect we placed.  The strange thing is, the audio from the source tape slips with the video, however, the mixdown does not slip at all.  When placing the full mix mixdown against the source timeline, it matches, nothing else does.

I have run a number of tests in order to find what specifically is causing the problem.  It seems, most effects cause the same problem, however if I use a dip to color on the video and keyframe the fades on the audio tracks, everything works.  Regretably this is not a viable solution for the length of our shows and the turn around time needed, the editors cannot be expected to keyframe all the audio and still get everything done on time. 

Again, any insight is appreciated and I'll be watching the thread if any questions arise.  Thanks in advance for any help.

just wondering...

what happens if you cut out one frame between elements and put a fade out at the tail and a fade in at the start of the next element?

If there is, at a minimum, 1 frame of black between each element and I send to Transfer Manager, everything works perfectly.  This is the current work around that we're using, lose 1 frame from the source per transition and keep the tape timecode.  I'd just like to find out what specifically is causing the problem.

well... don't know exactly what is happening but it looks like a fade out and a fade in on a cut withour black (filler) in between kind of tries to create a crossfade using handles on the left and right of the cut, and those are extra frames, but frames already on the timeline. Why don't you use a dip to color on the cut and see what happens?

As I described above, if I use a dip to color it works perfectly.  The problem is, it doesn't apply any transition to the audio, so we have to keyframe the fade into the audio.  This isn't a good enough solution for us as it would take too long to complete the edits.