Playback - On Error: Stop and Rerun Current Items Not Working.

See Stop and Rerun the Current Test Item After an Error - when you configure your project settings according to either Approach 1 or Approach 2, TC does not rerun after an error, as stated in the documentation.

For example,

Project Settings - rerun failed tests 4 times.

Error occurs first. However, TC it's calling the next line of code i.e. Log.Message(), which it should not!

On the next retry, the test passes, and I expect the next line code to show. Which it does.

Summary results

This appears to be a bug in TC, so I suggest opening a Support Ticket.

Throwing an exception works fine - the same should also occur with Log.Error() is called.