I have tried asking same question in SAP community network forums but got no response there, so trying my luck here:
I have 3 freeform datawindows, named A, B and C. C is a nested report of B, B is a nested report of A and A is a main report.
Report A is very simple, and has only one nested report B in it (in real life there are more, but one is enough to show my point).
Report B has a header, and in details band has many copies of C so that report B does not fit a single page (in real life there are many different reports, this is just for simplicity).
Now if I preview report B, everything is OK, I see the header on every page, and nicely arranged nested reports, but if I preview report A, on the second and later pages there is a gap the size of B header between first and second nested reports of that page:
Tested with PowerBuilder 11.5 and latest PowerBuilder 12.6 Classic.
If someone would like to test it, You can find TEST.PBL file in my dropbox folder.
Any ideas?
Difficult given we don't have access to your actual scenario which is more complicated. But I note that in your test.pbl, text object t_1 does not have its "Slide Up" and "Autosize Height" properties set appropriately. I have had to spend a long time getting these nested reports to work properly in these kinds of scenarios, but it usually came down to Slide and Autosize settings.
It might also help in your situation to create a Group (Datawindow Painter/Rows/Create Group) in your b datawindow layer. Group Header objects are more configurable than plain Header.
OK I took another look at your Test.PBL, I see it is able to duplicate the problem. Nice work. Tougher than I thought. If you like I can delete this answer until I figure it out (or give up).