Sorry, Kirsten, but I am finding it quite difficult to understand your explanations. 
Please use the exact Moodle terminology all the time, provide screenshots so we can understand the context.
1.- "Students have begun submitting their first essay responses. When we look at the report tab, it says 0% or 0/1 for the grade."
Which "report tab"? Do you mean the Lesson's Reports tab? Or the course gradebook? What do you mean by "it says 0% or 0/1 for the grade"? Please provide a screenshot.
2.- "We have been to the grade essays tab, input a response and selected credit (as opposed to no credit) but the grade is still showing as 0%."
What does this mean? You selected a score from the "Essay score" dropdown list?
"but the grade is still showing as 0%." Where is it showing? Screenshot please.
3.- "The essay questions was previously set to a score or 0, but I have updated it to receive a grade of 100".
I suppose you mean "a score of 0". Anyway, it was not a good idea to change the Essay score settings after students had taken the Lesson. Once students have started taking an activity you should never change its settings, or you might have un-controllable side-effects.
4.- "I have graded my test response with the new settings but it is still showing a score of 0."
a.- When you graded that Essay, in the "Essay score" dropdown list did you see the full range of 0-100 grades available? Which grade did you select?
b.- " it is still showing a score of 0" Where is this "0" score showing? Screenshot please.
5.- Anyway, I have tried to reproduce your scenario and it works OK for me.
a.- Create a Lesson with Lesson score:100%; create only one Essay question "essay 01", Score:0
b.- Student John Doe attempts Lesson, submits his essay.
c.- Teacher goes to Lesson -> Reports: John Doe's High Score for Lesson is of course 0%
d.- Teacher goes to Lesson -> Grade essays. The "Essay score" dropdown list only shows 0, as expected.
e. Teacher goes to Lesson -> Edit -> edit "essay 01" and changes Score from 0 to 100.
f.- Teacher goes to Lesson -> Grade essays. John Doe. The "Essay score" dropdown list now shows a 0-100 range. Teacher gives John Doe's essay a grade of 50%.
g.- Teacher goes to Lesson -> Reports: John Doe's High Score for Lesson is now 50%.
h.- If student John Doe goest to see his gradebook he can see that for that Lesson he got a grade of 50%
Joseph
