Location text says: "While Durin's Bane has no damage on it, progress tokens cannot be placed on Second Deep."

So if this is the active location and you earn progress do you get zero progress or does it bypass the location and go to the quest card? My inclination is the say you would not be able to gain any progress whatsoever as the location does not specify that you are able to bypass it (as other cards have). This seems in line with the new FAQ 1.27 as well. Just wanted to see what everyone else around here thought.

Correct. If DB isn't damaged, those progress tokens just fizzle. It's similar to the effects on Twisting Passage (TLD) and Perilous Swamp (TWitW) in that regard.

Travel with caution.