All recent builds I have tried (including the daily build as of 12-15-12)
Open the attached Blend
Play the animation and pause at a displaced frame.
F12 to render.
Note" viewport render in Cycles will work, but either renderer will "clear" the displacement in a full render.
System info file also attached.
Description
Description
Event Timeline
Comment Actions
If you set the subsurf levels the same for the viewport and render, it will work. The problem is that the dynamic paint is baked for a specific mesh resolution. Maybe there should be a warning about this, there's a similar case with cloth and softbody that is confusing;
Comment Actions
Simulation is only calculated for for single mesh "resolution", so if mesh structure changes at some point (in this case when rendering with higher subdivision level) the simulation is reset.
This seems to be a common cause of confusion for cloth, softbody and dynamic paint modifiers, so some kind of warning would indeed be nice until those modifiers are updated with multi-resolution bake support.
Anyway, since this isn't actual bug I'm closing the report. :/