Thanks for the reply Ray.
If you put the controller in non sequential mode you can reproduce my problem with the timer settings I used.
The results when in sequential mode is simular to your results. So its seems there is a difference how the timer behaves in non sequential mode.
I would like to avoid the 1-second delay as you discribed so the output has a smooth continues output but I see no way at the moment to compile the program with Linux with avr-gcc version 4.5.3. on my Windows computer. Would it be possible to obtain a pre- compiled version in hex with this change?