Freehand Polygon Draing tool leaves gray box blanking out display area

We see a problem when using the polygon drawing tool from the draw toolbar in ArcMap. This is not polygon drawing on a layer it is the tool that draws independent graphics on the map. When drawing a polygon on the map, no matter what shape, the area becomes covered by a rectangular gray box. The box continues to display when moving the map or refreshing. To make matters worse when switching to the layout view the map draws but is then completely covered with gray at the end. This seems to be a display issue in the software does anyone have an idea what could be causing this? Thanks.