If you create a surface from a DEM (and it is the ONLY) surface in the file.
Create a Feature Line,
and then try to use the RT-Click operation to add the feature line to the surface you will be told that there are no surfaces to select from.
IF you then ADD a surface to the surfaces collection, with NO data in it. The DEM surface is THEN selectable to add the break line object to.
Feature Line From Object Bug
If you choose Create Feature Line from Object and choose the XREF option, and choose to Add Elevations, you will NOT be prompted to selected the surface to extract the elevations from. The feature line is still be created however all elevations will be zero.
Test this for yourself, then let your vendor and autodesk know about these issues.