brand new epson 8350 has terrible ghosting

I just bought an 8350 for outdoor theater use. My screen is 16' x 9' so Im testing indoors on a sheet to make sure things are fine. Well it turns out there is major image quality issues, but Im not sure if it is a setup issue. I have isolated the problem to the projector (no image issues when the hdmi cable is plugged into a TV). The image is washed out because it is daytime and Im projecting onto a sheet, but you can see all the purple halo around the person. Is this a settings issue or a return the projector issue?

ok epson said the projector is broken and they are sending a new one.

Epson service is amazing. They sent me a replacement which arrived Friday (in 2 days) and it is so much better. Before you could barely see the picture in light in addition to the ghosting. Now it is bright enough that the picture is clear even with daylight.