The popup will not automagically change from blue to red - you must have told it to in code, or the user changed it to red. It will not change by itself from blue (which the user just selected) to red.
If the GUI uses "blue" but the popup actually displays "red" then you're not getting the value of the popup when you need to use it. Get it like this
selectedItem = get(handles.popup1, 'Value');