I was having the exact same issue. The fix greenodg suggested worked for me! Thanks a ton gd. I tweaked setting for a while and missed that one looking in Advanced and elsewhere.
But can someone please look into this as this is a workaround. I have to assume that the Venn diagram of Mac power users, there's got to be a ton of overlap between karabiner and Alfred users. and the Return to Ctrl (on hold is listed on one of the first Karbiner mods) https://pqrs.org/osx/karabiner/complex_modifications/#caps_and_return_to_ctrl-list-group
