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There was a partial Editing Rule to update the FC_CustomerType that had been written as an example blocking this rule's function. Atlhough it didn't block creation.
But for completeness, Final working logic was :
when [OrganizationalUnit#.]TypeofOrganizationalUnit == "Internal" then "Employee"
when [OrganizationalUnit#.]TypeofOrganizationalUnit == "County" then "County"
Thank you for posting an Update with the solution!
Maybe it will save some one a step troubleshooting their system.