Anonymungus!
I've been using the diatonic scale setting exclusively for years with no problems. Without looking it up, I believe diatonic = chromatic.
Another method would be: in PRV lasso the notes and then just drag the selection up a half step.
I wonder if it transposes correctly that way. Good luck! 
Hi Anonymungus!,
Like you ,I have been using the diatonic scale setting exclusively for years with no problems..
My Mistake was thinking the thing can handle Bebop style chromatic inflections along the lines of what Miles, Dizzy and what any other decent horn player would play

that's my story and I'm sticking to it

FWIW, I would try the Piano roll lasso thing the problem is the "new smart tool" is way too smart for me
OK I went back and decided to start something totally new and keep it super simple ...
This posts picture story involves both the chromatic and diatonic transpose functions found in SONAR
What I did first was to start a new project . I decided to only play one chord comprised of a C Major triad .
My midi guitar voicing was E,5th string G,4th string and C3rd string .
I only played one measure of music ...Then I copied and pasted each successive chord 2 ways .
On one track I used diatonic transposition and on the other track I used chromatic transposition ...
here are the pics ,
Track composed of diatonic transposed pastes .....
Track View

Piano Roll View

Staff View
In the above examples I only played on chord a triad and pasted all the consecutive chords in VIA diatonic mode.
Next I took the same one chord comprised of E,G , and C and placed it on a new track ...all tranpostions were done in chromatic mode ..here are the results
Track View on the transposed midi.

Staff View

Piano Roll View

Piano Roll View of both tracks stacked

Staff View of both transposed tracks stacked for comparison
Well there you have it folks . Both forms of transposition in SONAR have very different attributes that can be very useful to a musician working with midi .The desired results will depend entirely on what the persons end game is .
Also the results will depend on the persons ears and knowledge of music and music theory ...
This post has been my penance for having started a rather misleading topic with a dramatic SONAR title

( which I changed BTW)
Anyway , I was told a long time ago by a friend that you can only save one thing ,,,,
Your A$$ or your Face not both at the same time ...since I already tanked my butt , I may as well try to contribute to my topic in a constructive way that may help someone else ...
HHHmmm , the saving face part ..
all the best,
Kenny