Hey atarnow, I stumbbed across your post. I just had a similar problem with a DirectEntry instead of a DirectLabel (just inside of one DirectScrolledFrame).
I have found that the DirectScrolledFrame’s clipping is based on the frameSize of the component within the canvas, not on the length or size of the text.
Also I noticed some other bugy behavior in the scrollers in DirectScrolledFrame, particularly the vertical slider gettting stuck in version 1.2.9xx. I updated to 1.3.2 and have not seen the problem again.
Sorry our paths didn’t cross sooner, but hopes this helps you or someone else.