palo alto firewall dynamic address group is not working

Question

I am testing a simple dynamic address group (DAG) based on policy tag matching...but the when I add the DAG to the policy all traffic stops and no IPs ever populate the DAG. I verified the LFP matches the desired IPs in the traffic logs so its not a matter of the IPs not existing in the logs.

Tag: "Static Addresses"
DAG: Name: Internal Static Addr
     Match: "Static Addresses"
LFP: Name Internal Address Detection
        Rule1: Name: Static
               Type: traffic
               Filter: (addr.src in 192.168.4.0/26)
               Action: "static", target: 'source address', timeout: 0, Tags: 'Static Addresses'
Security Rule:
     SZone: Trust
     Source: "Internal Static Addr"
     DZone: Untrust
     Destination: Any
     Application: Any
     Service: application-default
     Actions: LFP: "Internal Address Detection"

While enabled, all traffic stops for the internal IPs and the DAG never populates with any of my internal IPs. When I remove the DAG from the Rule and set source back to "any" my traffic works again.

What am I doing wrong?