A couple of things could cause problems:
1) Your attributes are very large. They should be close to 1" high. 2" would be twice normal note height. The tag is 5" high.
2) Your blocks are non-annotative. They should be annotative to work with the system.
3) Your blocks duplicate the names of existing blocks in the OOTB callout drawings. Use your own block names.
4) The sheet number field is in a multi-line attribute. I don't think that will work.
Other things that could cause problems:
A) The drawing that contains the callouts must be closed in order for the palette to access them.
B) You must set the palette tool up correctly to place the callouts.
C) The drawing containing the model space view must have been saved after the view was created.
There could be some other problems but those are the main ones.
Architect, Registered NC, VA, SC, & GA.