It seems to me that the configuration you currently have should be working as expected. I recorded a sample test against https://www.bing.com and basically searched for something and used a WaitForExists step with the default (same properties as yours). Once the page was fully loaded, the test runner found the element in the DOM tree and the step passed. This leads me to believe that this behavior might be specific to the application under test and if the page is fully loaded in the Timeout time.
I would like to investigate the issue further and assist you. To do that, I need you help to gain access to the application under test. Please also share a sample Test Studio project, that simulates the issue. I will analyze it and debug it on my end.
In the meantime, you can try that step and properties against a publicly accessible application, like I did. Please let me know what is the behavior in that case.
Thank you for your cooperation in advance.