I'm in Fm2017, and using an EDD to apply a prefix "Note:" before note elements. When I apply this to my main .fm file some notes show up correctly, and others have the prefix "note:" without the initial capital.
I've searched the EDD and can't find any references to "note:". I've also checked the paragraph formatting, and there's no auto numbering applied.
1) Import element definitions from the EDD, making sure the box to remove format overrides is checked.
2) Confirm with Structure > Show Element Context that the prefix rule you want is indeed firing.
3) You say you have checked the paragraph formatting. Did you look at the paragraph catalog entries or check the formatting of a paragraph with the incorrect case in the prefix? Remember that an EDD can set individual paragraph and character properties as well as applying formats from the paragraph and character catalogs. From your description I would check whether the paragraph's default font properties or font properties assigned to the prefix specify lowercase.
4) Compare the structure of the notes that format correctly to those that don't. Is there a pattern? Do the containing elements differ? Adjacent elements? Attributes? Are first or last paragraph rules making the difference?
5) Create as small a document as you can that contains the error, even if it is invalid. A small sample may help you identify the problem. Once you have a small sample, you can try making changes, one at a time until the error goes away.