When the Observer block is oriented vertically (down to up or up to down ) the redstone dust at the output side is not transmitting to a repeater behind a block. ()
There is some screenshot which will help:
- on the one call correct.PNG I break a block on the right side and all work well.
- on the other one I break a block above the Observer and the repeater don't get the pulse trough the block (unlike the first case).