Hi smi-mark;
If you're assigning contact.Account to an "account" entity that is already attached to an EntityManager, then "contact" will automatically be added to that EntityManager as well.
The AttachEntity seems to change an entity's state to Unchanged when the entity is still Detached. But when the entity's state is Added, the AttachEntity call seems to not change the entity's state as you observed. I have to confirm this one with one of the lead developers to see if this is the expected behavior and get back to you.
I couldn't repro your issue with the fake composition context having no original values map. Could you give me a code snippet showing how you create and populate the fake EM? Please give me the DevForce version you're using as well.