Zero Priced Item Discounting

There are two settings that influence whether or not a zero priced item can get discounting applied.
First, in Company Setup | Accounts Receivable 2, there is an option called "Reprice $0.00 priced items." This option will reprice any item with a $0.00 MSRP when discounting a customer automatically.
The second setting is a Class discount in the Pricing Discount area of the customer file. Here, you can set discounts on all items that fit a certain filter that you can set.
If the class is left blank, then it is equivalent to the first setting in the customer file. If both discounts are available but the zero price indicator is only set in the Company Setup, then the general percent discount is specified for zero priced items. And likewise, if the class discount is checked for the zero priced item, then it's discount is applied.