Photoshop layer alpha channel not displaying/previewing correctly

I am having a new issue (I've been working with Photoshop daily since it's inception) that I cannot seem to find a solution. When I have a layered file and any portion of a layer is transparent (either by erasing, masking or pasting in a vector file as outlines, pixels or smart object, etc.), the layer doesn't preview at all like the artwork actually looks like. Most often the transparent part of the background becomes black, and in some cases the original artwork previews in a different color. If I turn on a solid tone background layer underneath the layer, it previews correctly. When I turn off the layer beneath, it previews incorrectly.

Below is a screenshot of an example of a vector graphic with a transparent background. The left panel shows the graphic how it's supposed to look. Please also note that the layer named "Layer 1" also has a preview icon that is previewing incorrectly (it doesn't match the actual artwork that is displayed in the artboard.) This displays correctly only because I have a solid tone white background layer activated underneath the layer with a transparent background (Layer 1)

The right panel shows how the graphic previews when I turn off the visibility of the background image. This same effect occurs when I have a photo and create a layer mask, or any of the other scenarios that involve any form of alpha channel on the layer. VERY annoying. As you can see from teh screenshots, the layer settings are "Normal", and opacity is 100%.

It should also be noted that when I save the file as a .png or other format that maintains the alpha background, the file looks as expected after it's imported into PowerPoint, In Design, web, etc, - it's ONLY the preview within Photoshop that displays this way (which is very annoying when building a montage with various blending, etc.)

I've updated my Photoshop to the latest version, restarted, etc. I can't find any setting that controls the preview - any thoughts or suggestions would be greatly appreciated!