Thanks for sharing a sample project. The issue is as suggested in post #2 above. If the start time of the MIDI media item itself is not on the grid -- in other words, if the start position for the MIDI quantization is not itself quantized -- then the MIDI notes themselves can't be quantized. The solution is to make sure the start position of the media item is snapped to the grid. It doesn't have to be snapped to the full beat. If the MIDI PPQ is the default 960 PPQ, the media item can be snapped to the nearest 1/256 note, or even to 1/256 triplets.
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