Special thanks to Tim Moyle and Sebastian Chang for figuring this one out. Haven’t seen this solution posted anywhere and it’s been a while we’ve been trying to figure out.

If your skimmer stops working, or “connect clips audio only/video only” doesn’t stick, or the text elements/generator window is acting all funky, there is one well hidden file that’s the cause of all your troubles: ~/Library/Preferences/ByHost/com.apple.FinalCut.[random_string_of_characters] . Delete it, done.
If you don’t have this file, chances are you FCPX UI is acting fine.