BC3 and BC7 treat the separation of color and alpha channels differently, so it’s expected that the color channels bleed into alpha in the general case for BC7. This is just how the formats are specified. There are modes inside BC7 that separate the channels “mostly”, and specifying Preserve Extremes causes oodle to use those modes internally for textures with alpha=0 or alpha=255, so that’s likely what’s fixing it for you on this texture.
This particular problem is actually why we don’t default to BC7 across the board for textures - there are enough cases where you need this separation.
Preserve Extremes however dramatically affects encode quality and so should not be enabled project-wide.
I would recommend having a texture group for your textures that have uncorrelated alpha channels and setting it to use BC3 for your encoding (AutoDXT in the UI iirc).
Oodle SDK version should generally always be latest. We only pin it for patch reasons as it usually causes the texture to change enough that it has to get resent - if you haven’t released yet or don’t need to worry about patch sizes you can feel free to update that to latest at any time.