Found Issue
I have found a fix for this. I beleive it has to do with the diffrent types of email accounts (IMAP,POP).
Without a drawn out explanation, IMAP knows if the mail has been read somewhere else. Where POP just takes a copy of it.
So, if my work computer(MS outlook) dowloaded the email from my server, the email shows on my phone already read.
4.0 must have had my email setup as a POP account and now its set to IMAP. I deleted the email account from the phone and set it up as a POP account and its back to the way it used to be.
I dont have a screenshot but after you enter your account info you can highlight POP instead of IMAP. I wasnt able to figure out how to switch so I just created a new account and deleted the other.