Ok, I uploaded notefades.it/notefades.mo3 to demonstrate the problem. The problem is most noticeable in the last pattern, where the melodic instruments are supposed to be faded out (channels 15+), but instead they keep playing. You should be able to see the note fades in OpenMPT or Schism Tracker, and XMPlay handles them correctly as well - just MO3 cuts them off.
The MO3.exe I'm using is from 2008, which appears to be the latest version that's available on the MO3 page.