I have a vague recollection that while off, a LED can actually receive light and generate a small current (in uA). Is that correct? How does that work? What is the best way to prevent this?
A LED can work as a (not very good) photodiode, and produce a small current when it receives light. You have to connect it like a photodiode, though, that is reversed polarised. In a normal circuit you won't have trouble with it.