Hi Mike,
Is it, perhaps, a preference setting in your Dreamweaver? I am not sure how the different font settings affect the dialogue boxes but there may be something there. It almost looks like your font has been turned into a small pixel font with no anti-aliasing in place.
I haven't experienced the problem, so I apologize that I cannot help more... but take a look in the preferences and see if that changes anything.
Best regards,
Brian