CAPTCHA security validation

Does the validation functionality for CAPTCHA security actually analyze a user's input and crosscheck with the CAPTCHA graphic for accuracy (and also checks the Security Question's answer) or is it simply looking for any type of human input?

Long story short (sort of), I had a simple contact form built with Form Builder 1 for a client's site. It worked perfectly on my testing server and on my client's remote server. Upon hitting the Submit button you were taken to a Thank You page and my client received the HTML email with the user's contact info that was submitted. All working flawlessly. I'm pretty positive that the CAPTCHA's validation gave me a warning when the user's input did not match what was required. Just recently, coincidentally after upgrading to Form Builder 2, my form is suddenly not working in various ways. For instance, I'm seeing the ‘failure error’ in the URL bar after form submission, and no matter what I type into the CAPTCHA fields, it always validates - even intentional, incorrect answers. However, the validation does work properly for name, company, and email fields - you get the expected warnings - in my case, a red message.

So then I built an experimental form from scratch using Form Builder 2 with CAPTCHA and am getting the same bad results as stated above. But, after stripping out all security validation, I finally get the form to submit properly and result in the Thank You page and HTML email. Every form with security validation I now build has absolutely no arguments with the security answers I submit, no matter how incorrect they are, AND I can't get the form to result in a Thank You confirmation page and HTML email. Same failure error in URL bar.

I've checked the server behaviors, and at one point I had a dupe Universal Email behavior, but nothing else seems out of sorts. I've even pulled archived form files from Time Machine (Mac OSX user here) from a time when my client's form was definitely functioning properly, but still the same bad results occur. I've also reinstalled FB2 and tossed the file that's mentioned in other threads when extensions aren't working properly. I'm at a loss. I can post some files when I'm back in my home office, but in the meantime, I'm really curious about an answer to my question in the first paragraph.

Really sorry for the long-winded post. My setup includes Mac, Snow Leopard (latest build), Dreamweaver CS5.

Thanks to all who can help.