Cross-references entered using "Source Type: Paragraph" change to "Source Type: Cross-Reference Marker"

I think I figured out my issue.  My document was started by using an older version that had been previously used in a book, and the heading already had a marker for a table of contents.  I recreated a new heading, without the marker, and then when I inserted the cross-reference, it stayed as a "Paragraph" and did not revert to the "Cross-reference marker." 

Thanks - the "pre-existing" marker was my clue.

Be aware that whether you use ST:Paragraph, or ST:Marker, the created data structures in the document are the same. You can confirm this by examining the MIF. The real difference between them is that By-Para creates a new Marker, and By-Marker requires a pre-existing Marker. Once created, FM has no idea which method was used.

So this would seem to be a problem with the Xref pod. Anyone who can help with that is going to want to know what FM version and patch level you're on.