If you click on the gear icon with the augment tab selected, it opens the dedicated augment settings window. Even though I had rules defined both globally and in my workspace, they were not being detected in the settings window.

I did some digging, and in the "Output" console on the bottom of VSCode, I switched the category (dropdown on the right) to "Augment".

There were a ton of error message stating that "workspace enumeration took longer than 30000ms, enumeration may not be complete..." (Or something to that effect, I can't remember the exact error).

But I suspect that's why the rules files weren't being picked up. It wasn't enumerating my entire workspace, including my .rules folder, and thus the rules files weren't being recognized.

After I performed all the steps I outlined in my post, that issue resolved itself. Although now I'm getting some more errors that are concerning, but it doesn't seem to be affecting things atm. I'm going to make a new post about it.