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So i just spent the better part of today chasing my tail and figured I share so others won't waste their time.
If you have a Setup Particpants Activity in a workflow and that Activity is in a Workflow block it will not add/remove the particpants selected during the task. Instead move that Activity outside the block and it will work. Another option is to set a preference in wt.propertieswt.clients.workflow.SetUpParticipantsAppletDisplay=true
this will use the 8.0 Applet instead of the html interface. That did work within the block, but I'd prefer to use the HTML interface instead.
There is a TAN about this 144073
https://www.ptc.com/appserver/cs/view/solution.jsp?n=144073
I hope this saves somebody some time..