Yes, after further testing (OBi202/5463EX) I agree with you, azrobert: It's not the barring that doesn't work, but the S0. If you wait the 10 seconds for the long timer to expire, the OBi will finally deliver a busy tone.
As an additional test, I made Mpli exactly "(!123S0)". (A visual inspection of the ph1 digitmap showed no variable length rules that might possibly match there.) I then tried dialing "123" and "123456". In each case, I would have expected the OBi to squawk busy after the first three digits had been entered, but it only did so after 10 seconds had elapsed.
I see no logical reason why the S0 designation should be ignored above, so I am considering it a bug. Does everyone concur?