I have a human rogue(3) bard(4) barbarian(1). As per the human race it says it drops the lowest class level, barbarian. Leaving 3 rogue and 4 bard. Being these classes are 1 level apart why do I suffer an experience penalty?

AFAIK, when it says it drops the lower one in consideration, it means if you have 2. Multiclass penalties apply if you have 3 classes, and they are not all within 1 of another.

Thats just the way it works! Experienced the same thing with a Rogue(3)/Bard(3)/Ranger(1).

Bioware doesn't explain it thoroughly enough in the create character screen, thanks.

Doesn't it drop the highest one?

Yeah, whatever. It doesn't matter, in the end. <.>

3/3/1 will always give XP penalty.

Well yes, but it explains why the 4/3/1 gets a penalty too.