I seem to have run into a problem with the C7 and Leviton DZ15S (Z-Wave Plus) switches.
I have a number of these switches that were previously paired with my C5. After moving them to a C7 per Bruce's excellent post, I find that while the switches function for digital control by the C7, the C7 is not able to see when the switch is turned on or off physically.
I've tried both drivers, "Generic Z-Wave Smart Switch" (which is what the C5 was using) and "Generic Z-Wave Switch". Neither pick up physical switch changes.
I see the Hail come out from the switch, and I see an ack from the C7, but I do not see the C7 sending the Basic Get/Basic Report as the C5 does.
Try taking a look here... It could either be a bug and/or a configuration step you need to do. Granted they appear to be different devices, but hopefully the same issue / solution.