I have mixed emotions about this post.
The good part:
I reported the "bug" to cakewalk through the website and was later told to call customer support, so I called them. I spoke with their customer service rep for about 10 min, having a philosophical conversation about whether any newly recorded midi note that comes into their system should ever have a duration of zero (I say no, he said it depends, ...huh?? why would a newly recorded midi note ever have a duration of zero...)
I was indeed given a work around that more or less works. Record your midi take, then select all of the notes before they are quantized (even the ones that were recorded with zero duration) and stretch the length of one of the notes with an above zero duration with the smart tool on the PRV. This adds the same duration to all of the selected notes and brings the notes with the zero duration up to a level of 1 or above. The quantize function will then find these notes and adjust them accordingly. It's not pretty, but it works. Many thanks for that.
The bad part:
I was told that this issue is all in my controller and that cake doesn't even consider this a bug to be addressed. However considering I can use the same controller fine in Studio One and Mixcraft, I do indeed think this is something the developers should address in the future. My service number on this issue has been closed and is DOA...
I must apologize for the above crack I made about MixCraft. I downloaded the demo to check my controller against it and I've got to say I was impressed. To me it's ugly and looks like a toy, but once I got into in to it I discovered that it is a damn fine and stable DAW that is really built for speedy workflow and quick music creation. My controller also worked flawless with it.