Hi,
I don't see any problem in HikaMarket or in HikaShop.
So I suppose that the problem is coming from your configuration.
Regarding your sentence
When a customer makes an order on the store for a product that is free (no charge) the order status is set to Payment Pending and the vendor DOES NOT get the order notification email. This is not working as it should.
If the order is still "pending" and you did not configure HikaMarket to send "pending" notification to vendor ; it is fully logical that HikaMarket do not send these emails.. Because you're asking him to do so.
So your issue, for what I understand, is that your free orders are not confirmed.
Otherwise, these orders won't stay in "pending" status but will change to "confirmed".
You can see to change the setting "send confirmation email" to "no" in order to let the plugin modify the order status before the order creation (and not after).
Regards,