Thanks for the reply. It's not the simple stuff. All folders have been checked. I've even disconnected mail from the server and started as if it is a new mail connection.
I hooked the email up to a new temporary user and didn't get the same thing, so there's something about my particular account that's making it think there's an unread email. Or more correctly, there's one of my mail files that has bad data. Unfortunately, Apple won't get involved in telling you to go into files and manually change.