Another check. Open up data frame properties and select the Coordinate System tab.
What is the data frame's (map's) coordinate system set to? Click Layers, is the testPoints layer listed under UTM?
Also, switch to the General tab. What are the Map and Display Units set to?
If the layer is properly showing up as UTM, try setting the data frame to the UTM zone, then double-check that the Map units are set to meters. Set the Display units to meters or decimal degrees and see if the data's now displaying properly.
Melita