As I had mentioned initially , it doesn't work properly only for selection. I.e. certainly beautify.app is found and run.
Out of curiosity ( as we have a source code - beautify.prg ) I did some tracing/debugging and turned out the piece invoked in case of selection
checks for return value from C function.

m.fSuccess = Beautify((m.cTempInfile), (m.OutFile), (m.Options))
IF  m.fSuccess  

For unknown reason ancient C code ( which results in fd3.fll ) started to return .F. on my box

Replacing with

IF  FILE(m.OutFile) && m.fSuccess  

did the trick.

When no selection, C beautify is run without further checks on return value or out file existence.

IF m.lSelection
....
ELSE
  m.fSuccess = Beautify((m.inFile), (m.outfile), (m.options))
ENDIF

I had no interest in tracing C code, so just patched beautify.app

>I cannot imagine the native beautify solution does not work for you.