Further to the above:

The CMFCPopupMenuBar::m_bDropDownListMode member is set equal to CMFCPopupMenu::m_bShowScrollBar member variable in the CMFCPopupMenu::Create.

This shuts off sending the WM_COMMAND when you click on a menu item.

Setting CMFCPopupMenu::m_bShowScrollBar true after the Create is called, followed by RecalcLayout() seems to correct the issue. Now I have scroll bars and can click on menu items to send an ON_COMMAND to the host window.

I'm not sure what downsides there might be to this. Feel free to comment. Thanks!

BOOL MyPopupMenu::Create(CWnd* pWndParent, int x, int y, HMENU hMenu, BOOL bLocked, BOOL bOwnMessage) 
{
    CRect               rParentRect;

    m_pBoundsWnd = pWndParent;
    m_pBoundsWnd->GetWindowRect(rParentRect);
    m_nMaxHeight = rParentRect.Height();
    // Call the base class Create method
    if (!CMFCPopupMenu::Create(pWndParent, x, y, hMenu, bLocked, bOwnMessage)) {
        TRACE0("Failed to create BECPopupMenu\n");
        return FALSE;
    }
    // These have to be called AFTER the create or you can't click on the menu items to send the ONCOMMAND to the parent.
    // Internally CMFCPopupMenu::Create() sets the CMFCMenuBar::m_bDropDownListMode = m_bShowScrollBar.
    // If it is true , it will not send the ONCOMMAND to the parent.
    // Setting m_bShowScrollBar afterward and THEN calling RecalcLayout() will ensure that the menu behaves correctly.
    m_bShowScrollBar = true;
    m_bScrollable = true;
    RecalcLayout();
    
    return TRUE; // Indicate successful creation
}