First off what are you priming and painting with?
Second, I would look into these wedge vents. It has cured this problem for me a couple times.

Here is a link that might be useful: wedge vents

Also check the wall and roof above that part of the bay to make sure it's not letting water run down the inside of the siding.

Christophern, using Zinsser int/ext latex primer and Behr semigloss exterior. I'm interested in your opinion of the wedge vents - with all the available gaps for air movement those really make a difference?
Lazygardens, I will have to check on possible water there; I'm embarassed to admit I haven't.
There's a close-up photo of some of the peeling added.
Thank you very much,
Ging

Of course, you need to look into the possibility of a moisture issue.

But I'm wondering. We had a problem with windows that we could NOT keep from peeling. We knew why. DH had used one of those strippers on them where you paint the goo on, then apply some paper, let it sit a bit then peel off the paper (and old paint). He followed the instructions to the T (he's very anal about stuff like that), but ever after that, paint would NOT last on those windows. After a short time, it would start peeling off. DH painted and repainted those windows for several years. Do you think anyone might have tried stripping that section with one of those products at some time? If so, you may have to do some research to find out what the remedy might be. Good luck.

Hi azzalea,
I know what I'm staying away from now! :) Truthfully, I doubt that's what is going on here. There was still some alligatored old paint on the bay when we scraped. Really appreciate the thought, though and thanks.
Ging

I will have to say it certainly is some moisture problem. Also the primer should be a slow dry oil. That is standard for the industry. I will make no comment about the dreaded Behr. The wedge vents are only needed if someone chalked up under the siding

Husband and I went out to look at that bay again and look at what we forgot about! This is a shot of the replacement laps we put in and painted at the same time we did the rest. (This explains why in the back of my mind I was so sure it had something to do with prep/old wood, etc.) I'm wondering if we need to do something we did with the west wall that is performing so well. We pressure washed and got rid of all of that 'dead' gray wood to the point it looked yellow again and sanded after that (obviously) then went at it with the primer and paint after it was totally dry. Do you all think that might be a solution?
Thanks,
Ging

You wrote
pressure washed and got rid of all of that 'dead' gray wood to the point it looked yellow again and sanded after that (obviously) then went at it with the primer and paint after it was totally dry.

I have found that after pressure washing wood, which is highly frowned on by most painters, what looks to be dry is no where near dry. I learned a trick that works great or invest a few bucks for a moisture gauge.

After the siding, deck etc. Has set for a day and looks dry tape a piece of 8mil plastic over a small section sealed very well with a good quality duct tape. Moisture will start to bead on the inside of the poly, when there is no longer beading of water it's ready to paint. For your problem go ahead and invest a few bucks in a electronic moisture gauge. Zinnser is the best primer available however it should be the oil based version of their product line not acrylic latex.

Good Luck

Forgot to add. To check the inside of the clapboard for moisture without making a hole in an interior wall, simply drill out a circle of siding from the exterior with 2" hole saw. Then glue the perfect circle back into place sand prime paint, will never tell you did some CSI.

Hi SouthernCanuck,
That's a neat trick with the plastic and one that I'll pass on. We are aware of the opinion of pressure washing and the necessity of the wood actually being dry and it was definitely dry as I stated.
In all honesty, I didn't want to say anything about what products we used because I did some searching of the forums before I posted this and really didn't want to get involved in the debate (sometimes heated) about oil vs acrylic latex and paint brand vs brand.
Do sincerely appreciate your thoughts and opinion,
Ging

Hey Ging - have nothing to add but do you know the name of your color?

Hi Sparks72,
I'm sorry to say that the color is a custom mix.
Ging

Darn. Our old house is green but too minty. Need a color with more gray I think.

Sparks,
Maybe you could print out a photo and try to match it? If it comes out true, that is... . I honestly don't usually go for this type of color, but it's turned out to be terrific for wearability and versatility. Thought about going yellow with a dark green trim, etc, but I've seen too many oxidized yellows and I'm leery of that happening.
If there's anything I can do to help, please let me know and good luck,
Ging