All I can really tell you is this:
- 1. open your file
2. set custom mesh settings on both objects (use different settings, just for the test)
3. double-check that they have different meshes shown by the 'Preview' button
4. run ExtractRenderMesh on the two objects
You should now have two mesh objects, neither of which uses the custom mesh settings set in steps 2 & 3. Next:
- 5. draw a plane (100 cm or so) and make a copy of it
6. repeat steps 2 & 3 above with the two planes
7. repeat step 4 above
Here, I get two custom-meshed planes, as expected. To confirm all of this, export the whole document (now with 4 planes) to Studio and switch your viewport to Hidden Line mode; you should confirm that the meshes for the planes are as expected, but that none of the meshes of your objects are meshed according to your custom parameters.
Regarding the Fire error, I have not been able to reproduce that. I do notice, however, that there seems to be some issue with the displacement, apparently having to do with the precision of the mesh, its distance from the origin, and the height and offset of the displacement -- in short, the object (the mesh object you included, not the NURBS ones, which are ignoring their custom mesh parameters) renders with odd some holes in it. I only see this with the current release engine (and in Studio 2.5.1 as well) though, and not with my current internal build, so I assume some work has been done in the engine which affects this.