Back when the aircraft data was set up, cargo was just a weight but otherwise a non-dimensional value - it didn’t have a volume hence cargo capacities were simply reduced or zeroed.
With dynamic turnarounds, cargo (and baggage) has not just a weight but also a volume. The aircraft data for those extended range models wasn’t looked into close enough and so volume values were taken over from the “normal” variants.
In fact, what we have in game as a “737-700ER” has the performance (payload/range) data of a BBJ1 with all 9 auxiliary fuel tanks. On the real 737/BBJ those 9 AFTs reduce useable belly capacity from 28.4m³ down to just 4.6m³. When I remember values correctly, that would result in volume for just 767kg (7CU) of cargo with zero checked baggage or checked baggage for roundabout 38 pax with zero cargo.
So yes, that is why you rarely ever see these models in real life. And if, then only in a full bizz cabin or such.
Those in game values certainly may be looked into, but correcting them would likely kill many airlines on existing servers.