This cannot be related to the firmware version (it already has been tested by some people), therefore uploading an older release won’t help anyhow.
How did you upload the application?
Did you use a different MIDI Interface this time?
Did MIOS Studio report any errors during code upload?
Which upload mode are you using? (hopefully “Smart mode”)
How did you test that the encoder is working?
If there wasn’t an issue during code upload, it could help to use MIDIO128 for troubleshooting the encoders and buttons.
It would also be interesting to know some more details about your MBSEQ construction.
E.g., flickering LEDs or non-functional buttons/encoders are a common problem if cables to the DIN/DOUT registers are too long. Also a short between SCLK and RCLK can cause this, etc… (more once you explained the details)