@gdgross,
Am working with tap tempo myself and an external stand-in switch. Will try to replicate your issue today or Wednesday afternoon. (Have not used tap tempo at all prior to setting up Layout 8 > Utilities; Utilities > Tap Tempo with my external switch.) Hope to use tap tempo for timing my metronome in FM9-Edit > Controllers.
You might need to check that your switch is tap only. Hold may cause the layout issue you described. Check FM9-Edit to be sure your HOLD function is not used for tap tempo, and that your MLM is disabled, if perhaps this might be contributing to the problem.