Just tried it in classic, and it does not work there either. Update returns 1. sqlcode = 0.
trace file contains no update statements. That's as far as I have dug, but looks like the same behavior.
HOWEVER...
I removed the Setitemstatus(row,0,primary!,Datamodified!) ie I allowed it to attempt to insert the data.
The insert failed due to primary key constraints. But the insert statement was generated. In both Classic and .Net.
So the problem is going from NewModified! to DataModified!.