Seems to be happening on 4.16 up until latest. (example uses 4.16)
Set up an emitter like you normally would.
spawn to burst, spawn quite a few in burst mode to see the problem better.
add cylinder location module.
Disable negative and positive Z.
Activate surface only.
result:
While same settings for sphere module still work like they should:
This basically breaks any emitter using surface-only cylinder locations in 4.16 and up.
Regardless of Niagara this is something that should be fixed. right?
Since this happens in 4.16 up to 4.18 and influences marketplace packages, client works, games packages on 4.16 and up I highly suggest to fix this in 4.16 and up.
Edit: Alex from realtimevfx discord suggested to use a height distribution of 1, which works as a workaround.
This was never the case in previous versions though.