3DS Max 2010
Before someone decides to laugh at another guy who is having trouble with cloning, please read.

I fully understand the differences in all cloning types. However, for some reason, whenever I create an instance or reference, changes I make to the original object (in an reference scenario,) or an instanced object or the original (in an instance scenario) do not affect the original object or instanced original objects respectively. This problem has not currently caused me many issues because at the moment I do not have much of a use for the reference or instance functionality; however I am aware that it may cause me issues in the future so I'd rather rectify the problem so this functionality is ready when I need it.

-Are there options that I need to make sure I have enabled?
-Are there known problems with the cloning capability?

Any help would be greatly appreciated.

I'm having this same problem but with 3DS Max 2011 - hopefully we can find a solution

I found a solution for my issue (likely not the same as yours)

I was making a clone (instance) of an object then using the scale to adjust the size of the instanced (or parent) object without a selection (vertex, edge, polygon, element) in the modify tab

To scale the instanced object and have it update other instances I had to select the "Element" in the Modify tab and then adjust the scale, without a modify selection any changes were not updating to other instances of the object