Legion artifact appearances previously unlocked for a class cannot be applied to new leveled characters that are wielding a legion artifact (instead of an heirloom) as they progress thru Legion content towards BFA.
It works on normal items, just not artifacts.
Seems odd. Does seem like a minor bug where the class hall artifact appearance limitations are being inappropriately applied to xmog vendors abilities.
Again, relatively minor thing for people playing thru the content.