I'm facing quite controversial issue with running two Hazel rules that I've set up to manage my Photoshop files. Here's a quick rundown:

Rule 1: This rule looks for any file that contains the string "psedit" in its title and adds a "photoshop" tag to it.
Rule 2: This rule identifies psd files that contain the string "psedit" in their title and runs a shell script to combine these files into a single folder. I also tried choosing Sort into subfolder action instead of running script but the results are the same.
The Issue
When enabled one at a time - both rules are running perfectly. However, when both rules are enabled, Rule 2 does not execute. If I disable Rule 1, Rule 2 works fine. If I enable Rule 1, then disable it, then enable Rule 2 - all good too. As a workaround, I modified Rule 2 to also add the "photoshop" tag before running the shell script and disabled Rule 1. Now Rule 2 doesn't execute at all, even though the Rule Preview shows the files as matching.
I suspect that there is something about tags that somehow preventing Rule 2 from executing properly. But since each rule works fine by itself, I'm not sure why this would be the case.
Troubleshooting Steps Taken
Enabled debug mode in logs - didn’t find anything abnormal.
Tried changing the sequence of actions -didn't resolve the issue.
Has anyone else experienced this or have any insights on how to fix it?
Thank you for your time and assistance!