Update: If you place down the stone, and re-mine it. Then it will smelt. It seems that the game does not like the old stone. (In other words, turn the stone from 1.12 into a new block (Cobble Stone) and then the game will accept it in the furnace).
I have the same issue. I had stone smelting in a furnace, but after the update, it will no longer smelt. Very annoying. I do not see any patch notes saying this is an intended fix. I hope this gets solved soon!
Update: If you place down the stone, and re-mine it. Then it will smelt. It seems that the game does not like the old stone. (In other words, turn the stone from 1.12 into a new block (Cobble Stone) and then the game will accept it in the furnace).