Unfortunately, I’m not able to reproduce it so it’s either a fluke or there is a very specific way to get it to cause this issue that just isn’t known.
As for the shadows casting black, if you’re using a dynamic only light this will happen because there is no dynamic bounce light or Global Illumination. If you use a Stationary or static light you get the bounce light from static lighting, or you can simply add a Sky Light actor to soften the shadowing. Modulated Shadowing being disabled will not have an effect on this. Modulated shadowing allows you to set a color for the shadow which can be softer than the black that is from dynamic direct lighting.