Workflow doesn't recognize field update from another workflow?

Workflow doesn't recognize field update from another workflow?

We have a client that is feeding leads from Formstack through Zapier into Zoho CRM Plus. 

We are attempting to automatically convert the leads upon receipt into account, contact and potential.

The workflow for converting only works when there is a field update.

We created a workflow rule to trigger when a new lead is received, to update the lead status to 'Not Contacted'.  <this works>

We created a workflow rule to convert based on the lead status having been updated.

We are finding that when the lead status is manually updated, the convert workflow is successful, but is not when updated through the workflow.  We have tried using a custom function for the update as well - also does not work.

We reordered the workflows so that the update workflow is above the convert workflow.

Is this a known issue or are we missing something here?

Thank you!