I, too, am suddenly having problems inserting rests. When I click on the "Simple Entry Tool", rests are supposed to appear, are they not? (see screenshot). How do I get my Songwriter 2012 to show rests again?

This isn't an answer to your question, but in this screenshot you're using ties where you should be using slurs in measures 4, 8, 11 & 15.

I believe it’s in the Window menu: Simple Entry Rests

Remember, you can always enter a note, and tap the R key to turn it into a rest.