Set Beat At Now--- Any Known Issues?

Set At Beat Now just doesn't seem to work on my Studio 8.5.  I'm running the most recent upgrade.  
 
Sure.... it works on simple midi files, ie not too many notes.....
 
BUT ON midi files with lots of notes (but only notes, no cc events or anything else).... SET BEAT AT NOW produces a tangled mass of notes, and very weird,.... thousands of pedal indications (cc 64 events) where previously there were NONE!!!  
Worse still.... UNDO won't undo any of it.
 
Strange stuff.   
 
Is there a known issue with this?
 
JG