At my work we are working on some software involving the capitalization of book titles. Under pronouns it is set to not capitalize, yet "Sie" is always capitalized. I thought pronouns were not capitalized except in the case of the formal "Sie". Are all pronouns capitalized, it's only the formal "Sie", or are none capitalized?
Pronouns are not capitalized in German. The only exception from this rule is the formal "Sie" as you suspected.
According to the "Old German Orthography" you also had to capitalize "du" when referring to the second person singular in letters. The new rule is that you can capitalize it or not – but only in letters or other correspondence like emails.
Also, if you're using pronouns as nouns you'll have to capizalize them (see Amtliche Rechtschreibung (2006) § 57.3. Examples:
Er hat mir das Du angeboten?
das innere Ich
Andrea ist in Italien gewöhnlich ein Er, keine Sie.
den Unterschied zwischen Mein und Dein kennen
While the first answer is right, this was a fairly recent change in the spelling reform. A lot of Germans still capitalize "Du" or "Euch" in letters or fliers for example. A lot of people have issues letting go of capitalizing these words as it was considered polite to do so.