Since installing W3 Total Cache my 404 errors have turned to soft 404s. That is, the 404 page displays, but the server code returned is 200 and not 404. So Google is indexing copies of my 404 page thinking they're actual pages.
When I disable the W3 Total Cache plugin, the error returns to 404. When I re-enable it, the error is once again 200.
I tried turning on/off the cache 404 in Page Settings and process 404 in Browser Settings.
Caching appears to be working otherwise.