Crazy ... 3 keyboards ... I guess you can rule that out! At this point, I think I'd try a re-install of Z3ta if it was happening to me.

Yes I'm aware the clip was shorter than the arp pattern. Just pressing play reveals the problem in the first beat. And I've reselected the preset before pressing play so its set to start at the beginning. Well how bout I render the midi clip to audio so you can compare that to what you hear on your system. I'll use the classic content/arps/arp two preset.

Ha ha. Done that twice. Reinstalled once. Then unistalled and reinstalled again. I think I must've done something really wrong in another life or something LOLOLOL

Thanks Chris S. The problem can actually be duplicated without even using a keyboard. Clicking on a key in the piano roll or using the ribbon on the synth produces sound different than the midi clip that plays back. And input wise I'm using one board through mid and one through usb just to be sure.

Apologies for the slightly incoherent post. It's late and my brain hurts.
 
I think I may be having the same issue as you. To replicate, I do the following in Sonar X1 Expanded
 
Open up Z3ta and initialize a patch.
Set up Osc 1 with any waveform
Set up lfo 1 as any wave form
In the mod matrix, have the LFO1 modulate one of the waves shaping parameters (I've normally been doing twist) with any curve.
 
Settings aren't important, just make sure you can hear the modulation going on.
 
When I press a note on my midi keyboard, I can hear modulation
When I click on the preview strip, I can hear modulation
When I click on the piano roll, I can hear modulation.
 
So far, so good. However, as soon as I press play in my host, the modulation is gone. Say for example I put MIDI trigger for C# for 4 bars and press play - Z3ta will only play the flat note with no modulation.
 
If I press play then hit a note on my midi keyboard, there is no modulation
If I press play then click on the preview ribbon, there is no modulation.
Even after I've stopped Sonar from playing, Z3ta will still output without any modulation.
 
Then it gets weird. If I leave Z3ta alone for a period of time - I haven't gotten around to measuring yet - then the lfo modulation will work again. As soon as I press play then it goes. I've also found that if I set up my continuous four bar c# piano roll trigger on a loop, the note will start to play flat, but after a period of time it will modulate. As soon as I stop and start again, the note is flat.
 
The best way I can describe it is it seems like when the modulation matrix gets has a lfo is assigned to a waveshaper, it somehow gets disabled when the audio engine gets activated for a period of time, then becomes active. I can't see any options in Z3ta or Sonar that could be causing this.
 
Any ideas anyone?

I have been racking my brain trying to figure it out since i am not having the issue.  i heard samples of the OP's problem, and can verify it's real.

After a little more testing, I've found the following

1) Changing the Real time quality seems to 'activate' the wave shaper again.

more importantly 2) The lfo won't modulate the waveshaper if the LFO is set to host tempo sync. If the sync is off, the waveshaper elements remain active when the host plays

Very odd, but at least I think I'm starting to narrow down the problem. Someone has probably already done so, but I'm going to raise a bug report in case the above information helps.