Hi 3image - the dotted line thing means you're getting a "straight snap" enabled.
The "on surface" snap will only engage if there are no other snaps available - it's basically the lowest priority because if it wasn't often times every single pixel on the screen would often be covered with one of those snaps.
Try temporarily disabling "Straight snap" by clicking on it in the bottom toolbar, does that then allow your desired snap to be targeted? You'll probably want to turn it on again afterwards because it's usually useful but it is getting in your way in this particular situation.
If that doesn't help please post the 3DM model file set up with the same view as what you show in your screenshot so I can try to repeat it over here and better understand what you're running into.
- Michael
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