Crossfading work fine here. 10.5.
If you didn’t reset your preferences and just re-installed Cubase, you didn’t change anything.
Again:
Please make sure you have 2 simple events overlapping. That’s the only way you crossfade.
Your picture shows a part. You said you dissolved it once. Depending on what you’ve done with the glue tool, you may have to dissolve AGAIN. AND AGAIN. AND AGAIN.
You must dissolve until dissolve becomes grey. Then crossfade.
I have put two simple events and overlapped them, the crossfade does not work. I have done exactly the same thing in version 10 and it does work, I don’t know what preferences you are referring to is there a setting or a box i need to tick? are you using Cubase pro 10.5 ?
Yes, I am using Cubase Pro 10.5.
Read shanabit’s last post very carefully. Watch the video, how to start cubase in safe mode.
If it doesn’t work in safe mode, I don’t know what to say.
Bingo that worked, deleting the preferences. THANKS EVERYONE ! 
YAY!
Great! Glad to hear! Before we move on can someone explain a couple of quick terms used above…
What is a rex file?
and
What is the difference between a part and an event?
Thanks!
Well, according to the manual, parts are containers for events.
Now, when we are talking about audio, when we record something by simply pressing record and then stop after some seconds, what stays on the screen with the waveform inside is an audio event.
But! When we are talking midi, and we record something the same way as before (press rec, play some notes on the midi keyboard, stop), what stays on the screen is a part(!), with events (notes I say) inside. These midi parts I can glue easily from start to end without problems, and if I wish make them in a huuuge continuous block (part to be precise), from project start to project end.
However, when audio is made into parts (for easier handling of a “group” of events, some editing functions are not available.
You can very easily make audio into a part without meaning to do so by glueing. Glueing will heal a cut in an audio event if both edges coincide, but in eeevery other case glueing will just create a part instead, for the two adjacent events it was used on.
Thanx a lot!