Hey @StephenGW, despite my first post probably sharing more wisdom, I did find a solution to this elsewhere and wanted to share with you.
In the Items property, keep Distinct(Choices([@'Controlled Locations'].Department),Value) as you have it.
In the Update property, write:
{
Value: yourlookupdatacard.Selected.Result,
Id:
LookUp(
'yourreferencelist',
thenameofthereferencecolumnwiththevaluethatmatchesyourselecteditem = yourlookupdatacard.Selected.Result
).ID
}
This way, it will update with a record even though the result of the distinct function is a value.