Hi Kris,
I've just recently encountered this as well. If a call to "getelevation" returns -32766 TopoFusion considers this value "no DEM." Sometimes DEM files have small areas with bogus values.
You might get a couple bad values in your track file, but if you open up the GPX in a text editor you can easily find the -32766 "ele" values and change them to something that makes sense.
You'll find that the 30 meter auto-download works better a) with more "model detail" and b) on smaller (geographically) tracks. If you split the track, for example, so that it downloads DEM data for each half seperately, you might (not sure) find that the track off the cliff problem is better.
Regarding whether TF is downloading or using DEMS, I agree it could be more clear. Checking the 3D view doesn't guarantee that you don't have a hole somewhere because of resolution issues. If you knew what area was giving the missing dem value, and zoomed in, re-did a 3D view you would see a big pit.
The code checks the upper left corner of the view area. If no elevation can be found in DEM, it downloads. If it encounters "no dem" areas later, it just sets them to a low value, which is why you saw the cliff off the edge of the world when you did have a missing DEM file.
You can also notice that it will list the name(s) of DEM files it is reading. However, once they are loaded once they are cached, so you won't see the names anymore!
Hope this helps.