If node have terms from vocabulary which not linked with current node type (for example — after using Content Taxonomy field with option to save terms to core taxonomy activated), then Term Display is not working for them.

It`s bacause of loading vocabulary list width taxonomy_get_vocabularies().

I`m using this code to load vocabularies:

$vocabularies = array();
foreach ($node->taxonomy as $tid => $term) {
  if (!isset($vocabularies[$term->vid])) {
    $vocabularies[$term->vid] = taxonomy_vocabulary_load($term->vid);
  }
}

instead of

$vocabularies = taxonomy_get_vocabularies($node->type);