I've been testing level releases in the hornet with the new targeting pod, having the same issue, here's a trk I made in a brand new mission I tossed together after reading the thread just to make sure, I also repaired about a hour before that. I've also been testing in an older mission, diving releases (30 degrees) have the LGBs track when released in AUTO, and I can confirm that dropping about ten seconds early by switching to CCIP also makes it work.
(in the trk I stopped lasing on the second drop due to it being obvious that it was not tracking) LGB Missing Hornet Bug.trk