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The ArcMap Service contains layers with labeled features. If a GET_IMAGE request to this service includes a polygon acetate layer, some or all of the feature labels underlying the acetate polygons do not display.
Whether or not labels are removed based on a graphic can be managed by setting the Feature Weight for the default layer in the actual ArcMap document (*.mxd). The acetate layer attached to the ArcMap Service inherits any settings made for the default layer in the ArcMap document on which the service is based. If the setting is HIGH, the labels will not draw within the boundaries of the graphic.
This setting is ignored when using ArcIMS version 4.0 or 4.0.1. ArcMap Server gives the acetate (graphic) layer drawing priority over the labels, by default. It tries to find appropriate placement for the labels around the acetate features; however, a place may not be found, so the labels get dropped.
There is no ArcIMS/ArcXML solution to this issue. Change the actual ArcMap document on which the service is based. Remember to refresh the ArcMap Service in ArcIMS after making the changes to the ArcMap document.
The location for this setting has changed with ArcMap 9.0.