Applying promotions to specific categories

How do you apply a promotion code to a specific item, or group of items.

I know this has been asked before, but when using Perch Shop, I can't seem to get a promotion to be limited to a certain grouping of products within a given category. The promotion seems to function in the checkout on any items, regardless of the items I place in my cart. Even if I set the promotion to apply to items in a specific category, it does not seem to have any effect or limit what items will accept the code.

I have a set called "collection," and then I have a category called "promotion". I have added my item that I want to code to apply to in the "promotion" category, and selected that category when setting up the promotion.

This is the code I'm using for promotion.html

<perch:shop id="title" type="text" label="Title" required="true" />
<perch:shop id="description" type="textarea" label="Description" editor="markitup" markdown="true" size="xs" />

<perch:shop id="from" type="date" time="true" label="Valid from" required="true" />
<perch:shop id="to" type="date" time="true" label="Valid to" required="true" />
<perch:shop id="active" type="shop_bool" label="Enabled" value="1" suppress="true" />

<perch:shop id="action" type="shop_promo_action" label="Action" divider-before="Details" />
<perch:shop id="discount_code" type="text" label="Discount code" size="m" />

<perch:categories id="categories" label="Applies to products in category" set="collection" runway="true" />

<perch:shop id="amount_percent" type="number" step="1" max="100" min="0" label="Discount percentage" size="s" divider-before="Discount amounts" notes-before="Discounts are applied before tax." />
<perch:shop id="amount" type="shop_currency_value" step="0.01" label="Discount amount" size="s" pretax="true" />
<perch:shop id="trigger_value" type="shop_currency_value" label="Trigger value" size="s" />
<perch:shop id="max_discount" type="shop_currency_value" step="0.01" label="Maximum discount" pretax="true" size="s" />


<perch:shop id="max_uses" type="number" label="Maximum total uses" size="s" divider-before="Usage" />
<perch:shop id="customer_uses" type="number" label="Uses per customer" size="s" />


<perch:shop id="terminating" type="shop_bool" label="Terminate" help="Stop processing further promotions if this one matches" />
<perch:shop id="persistent" type="shop_bool" label="Persistent" help="Apply this even if another promo stops the processing" />
<perch:shop id="priority" type="number" label="Priority" step="1" size="s" />


<perch:shop id="apply_to_shipping" type="shop_bool" label="Apply to shipping" required="true" divider-before="Shipping" />
<perch:shop id="shipping_methods" type="shop_shipping" label="Shipping methods" display-as="checkboxes" />

Why would this promotion still apply to all products in the shop?