and therefore the ability to cross-fade anything. I'm not sure what is going on. It doesn't mater what I have my record options set to. I have to be doing something stupid, I just can't figure out what it is. I've checked several projects and have the same issue. 
 
I'm running the latest update 9. 

When you say you've 'lost the ability', what actually happens when you try?

I'm guessing you're trying to create an overlap in lanes. In that case, if the clips are in the same lane, SONAR will slip-edit the clip in the target zone out of the way to prevent a same-lane overlap, and if they're in different lanes, it will just overlap them without cross-fading. To get an auto-crossfade, you have to make the move in the parent track with lanes closed.
 
I won't try to justify this logic; just sharing what I know about how it works.