Thank you for the reply.
- Windows Build: Windows 10 Pro, Version 1607, OS Build 14393.447.
- Yes the new surface is totally up to date with latest firmware according to windows update.
- I am trying to launch OneNote 2016 with the eraser button as well as trying to open snipping tool with the eraser button.
- When I restart the surface, the pen eraser works normally, same as if I re-pair with bluetooth.
For what it's worth, the answer desk representative at the Microsoft store that I went to told me that he has seen this before and that I will need to wait for an update from Microsoft to have it resolved.