Label defintion file icon not being applied

Have made up a label defintion with file icon and pinned to top, Have mad up 2 Assignments for it, the first one was the specific file that I wanted changed, this did not work so I made up a wildcard definition for it, this does not work either.
The pinned to top is working, but it is not changing the icon to the one I set.
Might be the extension I am using .txt, have not done further tests yet, bit busy atm.

turning off this setting in Viewer/Plugins fixes issue
Should labels overide this, or notify user that this setting is active ?

You're talking about thumbnails, not icons.

Labels don't override thumbnails.