Ok so it’s not actually saving unless you focus out of the text box!?
Looks like there is a similar problem on this thread: Assistants doesn't save new Instructions @_j @edwinarbus
EDIT: Can confirm it’s as @_j says, you need to focus out of the box before a POST request is sent with the updated instructions. This is very confusing because if you enlarge the system instruction text box, you will see a “Save” button, but clicking it has no affect - no request is sent to the API. It simply “saves it locally”, and then you have to focus out of the box for the POST to be sent.