Just in case anyone comes upon this issue in the future and finds this thread, I submitted a support case to Outsystems and got this in reply.
After a thorough analysis of this situation and the records provided, we would like to share our progress with you.
Several timeouts have been encountered in your lifetime environment for different processes, we suspect that this may be preventing you from applying the tag to the application.
As a mitigation measure, you can increase the Automatic Activities timeout value (parameter Scheduler.AutomaticActivitiesTimeout) in the environment where they have Lifetime installed, following the steps below:
Run the following query against the environment database: insert into ossys_parameter (NAME,VAL) VALUES ('Scheduler.AutomaticActivitiesTimeout', '900');
Run an iisreset command at the Command Prompt of any server where the OutSystems Scheduler Service is running, in this environment.
End any running process of the LifetimeEngine module, using BPT Utils or directly through the Service Center.
Trigger a new synchronization.

The issue you are facing seems to be defect RPD-3605, which was fixed in LifeTime Management Console 11.5.1. Please confirm in the Release Notes.
Let us know if the operation is successful after this adjustment.
If increasing Scheduler.AutomaticActivitiesTimeout to 900 is not enough, you can always update the
created record to a higher value by changing the VAL column to this one.
I was able to update tag and get the version number in Service Center to sync with the one in Lifetime after applying the parameter update.

