@Resourceful - From another thread.
I just tried the example and the cloth tears fine for me
Try placing the attached file in your media folder, this is cooked with the tearing flag set. Make sure you remove the following command:
cooked = DYN COOK CLOTH MESH(clothID, "../Media/Cloth/matrix32x32.CLOTHMESH", NX_CLOTH_MESH_TEARABLE)
..and load the mesh I have provided(attached).
There is a chance it is not cooking properly on your machine, it says in the PhysX docs that cooking can vary from computer to computer which is why it is recommended to pre-cook all meshes to file for any serious projects.