Lee Sommerfeldt said:

but could this be related to the Assignment Rule for a product-site?

I don't think so but using an old version there might be a bug that by pass the rules set on the category.
You can try to replicate it by:

1. Create a SO with no stock allocated
2. Create related PO (same product and date)
3. Assign the PO with the SO (manually or automatically)
4. Then receive the PO in Q* status.
5. Check if the stock in Q is allocated to the SO

I have just replicated the same behavior in V12 : indeed the assignment allows to bypass the status set on the allocation rule !!

Detailed of the test done in V12 (2022R2):

1. Creation of a new product-site: NA011 - BMS002 
2. Creation of a SO with no stock allocated: NA011 - BMS002 - 12 units
3. Creation of a new PO: NA011 - BMS002 - 100 units
4. Assigning manually the PO with the SO using the Assignment workbench
5. Receipt of the in Q* status.

As a result the SO is allocated on the Q stock newly created.

I have just learned something new. This is why I enjoy this forum ;).

I have just replicated the same behavior in V12 : indeed the assignment allows to bypass the status set on the allocation rule !!

Detailed of the test done in V12 (2022R2):

1. Creation of a new product-site: NA011 - BMS002 
2. Creation of a SO with no stock allocated: NA011 - BMS002 - 12 units
3. Creation of a new PO: NA011 - BMS002 - 100 units
4. Assigning manually the PO with the SO using the Assignment workbench
5. Receipt of the in Q* status.

As a result the SO is allocated on the Q stock newly created.

I have just learned something new. This is why I enjoy this forum ;).

Thank you so much! I didn't get notified of your subsequent response. I went ahead and changed this value on our product-sites. For some reason, our Finished Goods were defaulting with this Assignment Rule.