Yes that was it. I had created the file as /etc/qubes/policy.d/50-ssh-policy not /etc/qubes/policy.d/50-ssh.policy (- vs .)
Now I see the prompt and when I enter the vault VM’s name (vault-test) and click OK, I get the error error fetching identities: communication with agent failed.
The guide says to check the VM interconnection setup but I am not sure what to check.
For what it is worth, I am testing with a key that has a passphrase. Could that be causing the behaviour?