I have an intermittent bug on DynamicTexture. It seems to work fine on my ATI laptop, but on my NVIDIA FX5200 desktop it quite frequently misbehaves.
The attached patch shows the problem. Changing the colour input to the Dynamic texture (right hand switch) often has no effect on the quad. If you change the colour and then change the dimension of the texture (right hand switch) then you see the change in colour.
I had the same problem with DynamicTexture(Value) an a similar grafic-card (Nvidia Fx 5600).
Try the following: Look into the DynamicTexture with Herr Inspector and change the MipMap Count to 1mm (infact anything else then “all” works). If it still doesn’t work, change the Type of Texture to “volume texture” and then back to “texture” or just leave it as volume texture.
Set up like this it worked on my graka.