Labels, DLP, and Inbound Email

I am using labels and auto label policies to mark content. I then have dlp rules that block copilot from using that labeled content in any Copilot interaction.

However, I am having issues with labeling inbound email. it looks like I need transport rules to apply labels rather than auto label policies?

I have a support ticket open for 2+ weeks now.

Anyone know how to label inbound emails?