I'm attempting to use Dynamic Paint with the Image Sequence setting. I've followed all the necessary steps and I also chose to enable the setting Use Object Material.
The material should be green, but the .png files that are produced just have the default light blue.
This problem is only with this particular Blender file. I can't reproduce it a new file. The scene I created was very complex with many objects, but I've deleted all the objects in the scene and started with a new canvas, but the problem persists.
Surprisingly, if I open a new Blender file and append the brush object and the canvas object and hit Bake Image Sequence, it works fine.
Here's the Blender file, if you open and hit Bake Image Sequence, you'll see the problem. Any ideas? Could this be a bug?
EDIT: A bug report was submitted on this and it has been marked as resolved.