@BudgetSlasher would you be willing to share a picture of your condensate line connection at the WH? I have some reason to believe that it needs to go directly down 90 degrees and also have an ID as close to 3/4" as possible. The plumber originally installed a 90 degree PVC elbow but it went through a male-to-male adapter to be threaded into the WH, so I wonder if the extra distance introduced by the male-to-male plus the inner diameter of the PVC not being quite 3/4" is putting back pressure on the sensor. (And if the "open drain" aspect of my setup is a red herring)
I've attached (or at least attempted to attach) a picture of where the drain lines attach to the water heater. You will have to pardon the use of zip ties over hose clamps, it is something I meant to correct, but then realized clamps were not strictly necessary in such a low pressure situation.
Mine does not go down directly 90 degrees and it has not been an issue. The only issue I had with the drain lines early on was that they need to run pretty constantly downhill. If they wind up with a rise enough to fill the hose completely with water (mine sagged between anchor points on the way to the stand pipe) there can be an issue.
As for 3/4, I used it for the primary drain line, but as you can see for the emergency overflow my heater has a smaller port and thus I used a smaller hose.
I had always assumed that since the hoses were meant to be open to air (without any real pressure to speak of) and the internal part is likely an open drain pan the sensor for a drain blockage would be a internal water level sensor in the drain pan rather than a pressure sensor, but I have nothing to prove that.
When you have done the bucket test, did the ends of the lines ever get below the water level in the bucket creating a seal? Also when the alarm goes off can you tell if water has been flowing through the overflow (higher) drain hose in addition to main (lower) hose?
On a side note my basement dehumidifier, which lives next to my water heater, occasionally develops a slime mold blockage in some part on its drainage system that I have to clean once a year. So far I have not had this issue with the water heater, but I would not be surprised for it to crop up at some point.