'Automatic Filtering' in Outlook 'kills' message Rules...

Hi. I'm Brian and I'll try to help.

Rules work automatically only on messages delivered to the Inbox. That's always the way it has been for both Outlook online and desktop Outlook, either classic or new. You can run rules manually for any folder, but they'll run automatically only for Inbox messages as they arrive. If you have messages that arrive in the Junk Email folder that you want rules to process, then mark the sender or the sender's domain as a safe sender or add the sender to your Contacts. That will cause them to be delivered to the Inbox, where your rules will see them.

If they truly are junk, obviously you don't want them delivered to the Inbox. The Junk Email folder is the correct place for them in that case. There is no way to prevent the delivery of spam and never has been, since files don't work for non-Inbox messages and "blocked" means "delivered to the Junk Email folder." If you can't live with how Microsoft handles that, then make a suggestion at https://feedbackportal.microsoft.com/feedback (or upvote any similar suggestions) or look for a mail provider that allows you to do what you wish.

Paid services are better at that type of operation. A business using a Microsoft 365 for business tenant would probably have more control over that as well, but I don't know that with certainty.