Upgrade to QuarkXPress 8.
In all versions of QuarkXPress 7 the behavior of the discretionary hyphen was changed so that QuarkXPress could calculate hyphenation based on both the values set in the H&J preferences and the presence of a discretionary hyphen. If a discretionary hyphen was entered at the beginning of the word and at the point where one wanted it to hyphenate, then the discretionary hyphen was followed. Otherwise the word would be hyphenated according to the H&J settings for the paragraph style sheet in use. Unfortunately, this created some inconsistencies in how the discretionary hyphen was being applied by QuarkXPress 7. In QuarkXPress 8 the behavior of the discretionary hyphen was reverted to the pre-7.x method.