XDS policy not working for lookup

I created an XDS policy to limit the items displayed for specific roles.

• The primary table is EcoResProduct and the constrained table is InventTable, both being joined on the table relation EcoResProduct.
• The policy query filters records in EcoResProduct table that have a specific value in InstanceRelationType

The XDS policy works partially. It displays the correct items when I a create a form with InventTable as the data source. However, when I do a lookup on the ItemId while creating sales or purchase order lines, it shows all the items, ignoring the XDS policy. 

Has anyone else noticed this behaviour? Am I missing something.

Thanks.