This is happening to me too. Here's what I'm doing.
1) Fresh install
2) Copy a fresh ModuleManager.4.1.3.dll into GameData
3) Copy a fresh ToolbarController 0.1.9.4 into GameData
4) Copy a fresh Clickthroughblocker 0.1.9.5 into GameData
5) Copy a fresh SpaceTux Library into GameData (version unknown)
6) Copy a fresh Kerbal Research and Development 1.16.0.6
7) Edit GameData/KRnD/MM_Patches/parts.cfg so that costs go up by 1.1 instead of 2, and improve by 1.01 instead of 1
8) Run KSP for the first time since freshly installing.
9) Module Manager automatically creates .ConfigCashe, .ConfigSHA, .Physics, and .TechTree files
10) Create new save
11) Go to VAB & Cheat myself 1000 Science.
12) Using the stock single man capsule and the flea solid fuel rocket, upgrade both dry mass and ISP.
The cost keeps doubling and the improvement stays level, as it would have if the pre-modding parts.cfg file still existed.
This happened to me intermittently in 1.3 - 1.5, and never in 1.7. I haven't played since then. In 1.3-1.5, it seemed like KSP didn't like some values - it would use a cost factor of 0, or 1.3, but never 1.1. Whenever it wouldn't take a value, it would use the defaults. I've tried 0, 1.1, and 1.3 so far, and none of them have worked.