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The key here (no pun intended) is to use separate COM ports for rig control and digital PTT.

I use an RTSystems USB-62 for CAT/RIG Control, which shows up as COM3 in Windows Device Manager, and this is set up in the main HRD program.  I use a West Mountain Radio Plug & Play RIGblaster, which shows up as COM4, and this is set up in DM-780 under Program Options>Modes + IDs>CW>Enable serial (COM) port keying, toggle pins DTR only. under Program Options>PTT>COM Port, it's also set to COM4, and RTS is selected.

This allows for the radio to be keyed when in CW mode (do not select KYR, do select BRK).

Having said all this, DM-780 does a poor job of decoding CW in my experience, which is with slow speeds like 5WPM.