Symptoms
Creating an incident through a record producer item on Service Portal doesn't hide variables in the Incident Variable Editor on the incident record even though these variables should be hidden based on catalog UI policies and not seeing the same behavior on the same release/patch level out of box.
Release
All releases.
Cause
Check if the widget in use on the portal is customized because this could be the underlying cause.
Resolution
If there is a customized widget in use, try the corresponding out-of-box widget instead. If using the out-of-box widget allows the catalog UI policies to hide the variables as expected in the Incident Variable Editor on the incident record, then it's an issue with the custom widget and not with the catalog UI policies.