Just for kicks, I left digdug on for well over an hour on the attract mode and when I came back, it worked as expected.
I'm using mame 111 and the standard digdug.zip (so non atari). I believe the only dipswitch I changed was to put it into cocktail mode, otherwise it should be default.
If you can reproduce the problem reliably, you should certainly submit the bug to mametesters, otherwise, match my setup and you should be fine.