Hi Timo,
Thanks for the reply. This equation is a portion of the Seismic Wave Equation. The non-trivial solutions to this differential equation describes both the P-waves and S-waves that are commonly referred to in discussions of Earthquakes. As soon as I read your reply I realized my mistake. The Lambda in the equation is a constant for a simple Earth Seismic Model, which is the most common convention in Seismology, and using this model then that one term would indeed be zero. However, in the derivation I was reading, the Earth Model was more complex(and accurate) and in this model Lambda is a function of depth and therefore a gradient of Lambda is non-zero.
Thanks again.