Hey Lauren!
Ah, good question - I don't believe this is a bug as if there is no file found, it errors out, which is intentional. I don't believe this is a way to not provide an error and stop the workflow if the file is not found.
It's not hitting the condition because once there is an error, the workflow is stopped in its tracks, which results in not getting to the next step.
I'll send a note to my team who may have an idea on an alternative solution here