The line, shown with arrows, was hand-drawn to illustrate the bug.  It is a single ArcView feature that approximately encloses a polygonal region, but is not quite closed.  The arrows show the intrinsic direction of the line.  Evidently the polygon it almost encloses lies to the right of the line as it is traversed in the direction of the arrows.  The solid colors were produced by applying the ArcView "queryPointDistance" request to the centers of every small square cell.  Blue colors correspond to results indicating the center is to the right of the line; red colors, to the left.  Therefore the interior of the polygon should be blue and its exterior should be red, except where some of the interior "spills out" from the break at the upper left.  Some (but not all) of the errors are labeled.