Please explain the lost loot machine to me.

There is a way that I thought the lost loot machine worked and then there is the way that it actually works. My assumption was that it would preserve the most rare loot but that doesn’t seem to be the case.

Case in point. I was doing the terramorphus raid, and as one would expect I get a legendary drop that’s unrecoverable. Nbd. I’ll just go to the lost loot machine. I’d do so and everything is blue. Zero purple, let alone legendary. Clear it and still no legendary.

From this point I’ve noted that I’ve seen multiple raid drops that just don’t reappear. Please tell me how to get my raid loot.