There is only one setting to change (the inside option) and have run it both ways, with the box checked and unchecked.
Here is my current work flow: I published a public survey using survey123. I am very concerned with location information so the respondents have the option to enter their location using a geopoint question (by selecting the location on a map), selecting their address from a drop down (FullAddress), and/or typing in their address into a text field(FullAddressOther). I have downloaded the responses, query to only display features that have a value in the FullAddress field (where FullAddress is not null), join those responses to my address layer and use the Feature to Points tool to export the data to a new layer, ensuring that the address points have the correct coordinates.
I was also wondering if the tool might not be honoring my query and/or selected records.