If you create a reference pattern all references of the feature/group which are to the first instance in the referenced pattern, are replaced by the corresponding references in the second instance, and so on.
The two most likely reasons for the pattern to fail are:
1. One or more of the references that are not varied by the pattern do not exist at the place of an instance.
For example: If one half cylinder is selected as reference, the pattern may fail when it gets into the area of the other cylinder half.
This can normally be tested by trying to redefine/modify the original feature accordingly and see if it fails
2. One reference is "eaten up" by the pattern.
Merges are apt for this, as every merge elimiates the second selected quilt, merging its geometry into the first selected quilt. But also solid features may remove surfaces or edges.
For example: If multiple quilts should be merged to the same surface, it needs to be selected first, or it will no longer exist for the second instance.
The latter is the more difficult case, as it cannot be tested with the original feature. For troubleshooting I normally create a pattern of two and vary the offset or increase the number of instances until it fails, then check what has changed in comparison to the last successful regeneration.
Normally either a reference was lost or the references have changed in a way the feature geometry can no longer be created. No magical mysteries!
For example, if the contour of a flat surface is projected onto a sketch, the sketch will fail for a pattern instance that is rotated to be normal to the surface, as the projection will become a single line (actually multiple overlapping lines).
Oh, I usually figure out the problem before support can get back to me.
