This issue sounds extremely familiar. Its in eCS as well this issie with DOS and WIN/OS2 windowed sessions. This is not an OS/2 version specific or video driver specific issue "GRADD, SNAP or Panorama".
Its a GRADD version specific issue. All of these drivers I just mentioned are GRADD drivers.
As far as I can tell Panorama, SNAP and GRADD all ship with the same driver that provides all the video support for DOS and WIN/OS2 sessions. And this is vsvga.sys bldlevel version 14.105. Or have I got it wrong ?
What I see on more modern systems is that DOS and WIN/OS2 windowed sessions are also not working with the switch Rich Walsh mentioned you can put behind VSVGA.SYS.