Label Contours Function makes Circles instead of Elevation Text

You may also see the message:

Error did not find after pline in contour labeling

Update October 19, 2011: MicroSurvey CAD version 10.7.0 has a new option when labeling Contours:

Select method: Trim/Wipeout <Trim>:W

Type W for Wipeout and this will use a different method to hide the contour behind the label (without modifying the contour.)  This will resolve the problem.

Wipeout frames may be visible, fix this by:

_Wipeout

Specify first point or [Frames/Polyline] <Polyline>: F

Enter mode [ON/OFF] <ON>: OFF

If for some reason you need to use the Trim option please modify your drawing settings as explained below:

Go to:

Settings | Drawing Settings | Entity Modification | Change Settings for: Trim/Extend.

Set Projection mode to "Current UCS xy plane."

The labels should work now.