Problem with Z-offset: print bed getting damaged - Ender 3 (32-bit) with BL Touch

Hi all, I am hoping I can get some help with the issue I am having. I have a Creality Ender 3 with 32-bit v4.2.2 board. I recently purchased BL Touch autobed leveling kit and installed it on my Ender 3

I have tried following the instructions per the documentation that comes with the product and also the following:

The BL touch is successfully installed and auto-leveling seems to be working fine. However, the z-offset does not seem to take effect. Every time I start a print, the extruder crashes on to my print bed: it grinds the print-bed surface and has damaged it. I have tried multiple times but with no success. I am not sure what I am missing.

I am using the following for the test print

Any help to resolve this is greatly appreciated