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Looks like this is actually an ongoing open issue with Gutenberg/FSE as a whole, and not something that you have missed with regards to setting things up in CPTUI/Extended.
“Navigation block: unable to add CPT archive page as link”: https://github.com/WordPress/gutenberg/issues/39644
Following that up with this one, related to classes applied to custom links: https://github.com/WordPress/gutenberg/issues/61266
So, not sure what to suggest other than chiming in with those bugs to try and urge on more, and wait, which is unfortunate.
Got it. Bummer. Thanks for checking for me. Appreciate your time.