Hello,
I got a same problem while trying to do your steps. It seems that PAD is having problem with selecting value from a dropdown list on a dialog. If I use a dropdown list that on the main window (not on a dialog), then it works just fine.
I think you can use another workaround solution that is by using Send Keys to the window. You can see the image gif that I attached in below. In this example, I added Wait actions just for viewing it easily, you don't need to use it in the real flow.

Thanks and hope it can help you.
Mike
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