Thankyou for posting your query on Microsoft Q&A platform
Glad that you figured out the way to resolve your issue and thank you for posting your solution so that others experiencing the same thing can easily reference this! Since the Microsoft Q&A community has a policy that "The question author cannot accept their own answer. They can only accept answers by others ", I'll repost your solution in case you'd like to "Accept " the answer.
The classic experience was reverted back ,which revealed that the Policy Name had too many characters and exceeded the 50-character limit. Once it was consolidated, the hold was applied successfully and it resolved the issue.
Reposting this as an answer to ensure it benefits the wider community. Kindly accept the answer by clicking on Accept answer
button so that the solution reaches the community in case anyone is facing similar issue. Thankyou.