Here is why it will not work. You did not actually define a State or a State flow for it. Give me a few minutes I will show you how to make it work and hopefully demonstrate States and State Grouping more accurately.
Ok instructions coming in moment…\
First we create an Order State with Group Code SStatus. Go to Settings/States
Update your Update Order State action and this time choose from the dropdown under State Name: SStatus
Now just update your rule to add the updated action and it will work!
This is a lesson in how to properly use States brought to you by The Man! haha jk