Hi,
I have the same issue here. I think the KeyLab 88 (first version, not the MkII), doesn't accept continuous CC in the sustain port, so when I want to use this feature, i connect my sustain pedal in the Expression pedal port, and change the CC to 64 (sustain). This works, but if you want the continuous sustain AND the expression pedal... well, I think then you are f*****.
It seems strange, because the MCC allows you to choose the continuous option in this port, so it should work this way, but it doesn't...
If I'm wrong, and anyone knows how to make it work this way, I'd be really happy (or some new firmware, but since the MkII are out there, I think that there will be no more firmware upgrades for us, users of the first born KeyLabs).