I playing coop in Steam, v 1.5.3 3390 I can't seem to make pause work. It works fine in the solo game but not in coop. I'm running Windows 10.
That's because it's co-op, meaning multiplayer. You can only pause in singleplayer for obvious reasons. It wouldn't be very good if one player could pause everyone's game in multiplayer..... Not a bug to fix. In MP you have to shut the server down to "pause" the game. For co-op the host has to leave the game and shut the background server process off to "pause".