The problem is now corrected: On the Radio RRC, under Keyer Settings, I had to disable "PTT activated by Keyer." It is now set to NO. In this configuration, the K3s will transmit in CW and SSB mode when the K3 menu allows for CW transmission in SSB mode.
This setting also fixed the CW QSK switching time. It was slightly slow before, now it is super fast.
Paul, W9AC