Hi! How about checking to see if there is anything in the "bad" dreams telling you anything you need to know about the phobia you have?
Even though I know very little about your situation, and this might or might not be what's happening for you, my guess would be that your bad dreams are increasing while using the anxiety-free tape, because your unconscious is being stimulated to talk to you, while your conscious mind is still "keeping the lid on" while you're awake regarding whatever issues or situations that are causing your fears.
How about doing the CD with an itntention of resolving the bad feelings from your latest dream first, and perhaps that would start unravelling the "thread"?
And, also when it comes to phobias and fears, I would check out the "recommended reading" section on Learning Strategies' website, where I found two books that I have read and found EXTREMELY fantastically (ok, enough superlatives...) helpful when it cones to daling with any kind of emotions: "The Sedona Method" by Hale Dwoskin, and "Loving What Is" by Byron Katie.
Hope you'll get through it!
:-)
