Adam
Do you have any other mods installed?
Have you had a mod installed which has altered the usercp_register.php file?
Can you check that:
$code = substr(str_replace('0', 'Z', strtoupper(base_convert($code, 16, 35))), 2, 6);
Is still in that file and that the last figure is still 6?
This is long shot area as this would if set wrong say 0 for the last figure give a 0 character captcha. However this wouldn't (correct me if I am wrong Paul) stop the background characters from appearing.
You could try installing Antispam-ACP the latest version (2.02a) uses a modified version of the Better Captcha code and if you've installed for Better Captcha all you would need to do would be to copy the fonts from AS-ACP includes and their usercp_captcha.php file instead of Paul999s. If it worked then it would be down to something peculiar to Paul999 install and to confirm just swap the usercp_captcha.php file back.
I know a strange and messy way to test things.
I use a combination of AS-ACP and better captcha plus a few other tweaks to block spam. So far none since they have all been installed (to be fair none since I installed Paul999 code) but installing AS-ACP - originally massively dropped the number of bots. The new version of AS-ACP also logs failed attempts which is nice to see how the bots have tried to guess at the captcha.