Thanks for the help. I use Gretag Macbeth Eye-one pro with Profilemaker Pro software. I have indeed changed saturation to 70% as advised earlier but left ink limits at 150% on all trials I made. Though I tried one test chart by changing the saturation back to 100%. But the posterization in Red is still there.
I always use the ECI2002 test chart in Profilemaker & it has always worked. This time I tried the IT8.7-3 chart with 1100 and a few odd patches and the profile was smooth and all the Red posterization was gone. But the colors were incorrect. I have a test image which contains a photo of the GM Color rendition chart among other things that I print to check profiles. The colors on these are all wrong when I profile with the IT8.7-3 chart, but perfect when I use the ECI2002 chart but have Red posterization.
I tried to post-linearize the problem profile in GM Profile editor. Again the posterization went away but all grays become much redder.
Today I took everything to a friend's repro shop who uses Monaco profiler on a windows setup. I only managed to try with 917 patches with pre-linearization. The result was absolutely same as Profilemaker with IT9.7-3.
Tomorrow I will try your suggestion of changing ink limits to 250% and saturation 70% with fresh ECI2002 chart
The built in profies with PrintFab are absolutely fantastic. How do you do them. Seems like black-magic to me.