Okay I gave the gave a few more whirls trying to find this cause:
trial one was a game with just a custum map (no modified rules)
trial two was the same as trial one, but with modified player rules to give me 25 MA
trial three was the same as trial two but civ3mod was modified to give MA 100 MP and increased A&D values by 10x
Tech: 5,18,16 ~5%
Gold 2,14,10 ~5%
Unit (settler) 2(1), 9(2), 9(0) ~5%
Barbs 26,145,101 ~50%
Nothing 14,81,55 ~30%
Map 5,12,4 ~5%
Again this is diety as Japan with raging barbarians and using patch 1.21 (downloaded a week after its release).
Based just on my results, I would conclude that there is a read error with regard to the barbarian precentages in the bic file, when the rules are read from a scenario file. However, as sumthinelse gets this with even scenario files with unmodded rules and PC Highway doesn't observe this at all, that simple explanation no longer holds.
while I don't believe it is a specific mod that causes trouble (since Sumthinelse is getting this with unmodded bic files) for the record the changes I made to the bic file that refused to generate barbs from huts was: archer +20 HP, 100 MP, treat all terrain as roads, blitz, 100A and 100D. And I gave player 1 3 archers.
And yep these barbarians that I finally did start getting are from the huts. I left the last map I played in a mass of barbarians from the huts, since each one generates 3.
I guess I could if there is interest post up the 2 bic files. The one that will not generate barbarians from goody huts and the one that will. That way we can at least rule out or in system dependent behavoir. This is shaping up to be a very tough bug to find and get rid of, since there seems to be at least three different types of behavoir being reported.