New folder in Applications doesn't show highlight ball on macOS 27

Have you rebooted your Mac? If not, that's the first step. 

I cannot replicate the issue that you describe. When I open the Applications folder, I can create folders (I named them so they are at the top of the list) and apply Tags ('highlight balls') to them as normal. One or more Tags can be applied.

See the following: Use tags to organise files on Mac – Apple Support

See also: Customise the look of folders and files on Mac – Apple Support

Note that for the custom folder colors to apply, you need to have one or more Tags designated as Favorites.

To correct that, go to Finder > Finder menu > Settings > Tags tab, and if the box at the bottom is empty then drag some Tags to the box. You can also use the bottom option to color the folders to match the Tag, as in my example above.

If you have done that and are still not seeing the Tags applied, then Relaunch Finder. Sometimes a quick layout refresh solves the problem.

• Hold the Option key,
• Rght-click the Finder icon in your Dock
• Select Relaunch.

If that doesn't correct the issue, see if the problem is present when you boot in safe mode. That process performs some system cleanup and clears caches, and also disables 3rd party extensions that may cause problems.

Start up your Mac in safe mode - Apple Support

If that does not correct the issue, test in a new user account. A newly-created user account will have all settings at default, and if the issue does not occur in that new account then it provides guidance on what may need to be changed to correct the issue.

Add a user or group on Mac - Apple Support

Once the testing is complete, the new account can easily be deleted.

Delete a user or group on Mac – Apple Support

Those steps will help to isolate the problem.

I did replicate this a few times, but now it appears to be working.

Also I could only make it fail when merely adding a tag; choose "Customize Folder" always seems to work.