Hi KeyJay,
FMOD doesn’t support 2D distance scattering, only 3D. When you set the distance to 0, distance scattering is disabled and the scatterer will play in 2D (as it sounds like you have noticed).
When you set a scatter distance, the scattering will occur from whatever is scattering. Depending on how things are setup in your game, this could be a long way from the listener.
To address this, you will either have to position the scatterer on the listener or disable distance scattering.