Are there any known limitations with using field sourcing for custom segments set through web services? Strangely I am able to get the sourcing to work with CSV/UI but when the transaction comes through SOAP Web Services the defaulting does not work

Checkout the conditional defaults related preferences in the SOAP Web Services Preferences

Thank you, this helps a lot! To add another layer of weirdness, do you know of any preferences set at the custom segment level? The custom segment from the NFP bundle does default in with the a value from the source list, while my 'custom' (Non NFP bundle) custom segment does not.

You may need use the values internal ID instead of the value as a string. Example is source from a item record where you’ve set a value in a field...instead of sourcing the value, you need to add .id to the end to get the internal ID of that value to set the segment. In your integration, you likely have to have a table with both columns ID | Name if this is your issue.