Sorry to waste anyones time on this. This is an issue that you will see if you are running REX2020 weather. Later testing shows that if you are using the MSFS Live weather, that the waves/white caps will behave like they should.
So if you are seeing something like this, it is a problem using REX2020 weather. I have the latest version also.
Screen shot using MSFS Live Weather in the same area on the same flight with REX2020 disabled.
As you can see, no white caps.