F8 states that the unit is being supplied from Rangoon. Rangoon is a primary supply source for the Burmese MIL. However, it is unoccupied and in the ZOC of the adjacent Japanese corps. Supply is traced from the unit to the source, not the other way around, thus this unit should, as far as I can tell, be out of supply.
SUPPLY PATHS
Supply paths are traced from a unit to a primary supply source.
(Note that a notional unit, alone in primary supply source in an enemy ZOC, does not have to trace, and is in supply.)LIMITS ON SUPPLY PATHS
You cannot trace a supply path:
Into an enemy ZOC (unless the hex contains a friendly land unit)
Next post will contain the saved game file.