With the current shipping version of Adagio Time&Billing (and time entry method set to 'hours'), I am able to type .1 for a new time entry and when I tab from the field, it leaves behind 0.1 hours, which I believe is correct. There aren't any options or settings for how to enter hours less than 1, so this shouldn't behave any differently. Which field are you typing into (time entry, bill entry, somewhere else)?

Did anything change recently (install Windows updates, change Windows regional settings, etc)?