PID Tuner works by linearizing your nonlinear Simulink model. If the model linearizes to zero, the PID Tuner would give you the message you saw.
As you have already determined yourself, the linearization issue results from this MATLAB Function block that behaves differently depending on the value of some parameter you have in your model.
What you can do is specify the linearization behavior for this block that would make sense by using this functionality.
HTH.
Arkadiy