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Having opened a dgnlib file in order to create a Display Style containing a Display Rule for all to use the Condition Editor does not display the Element Types required in the Pick property... list.
The dgnlib file is empty of elements and thus the Element Types are not displayed in the Pick property... list. If an element is placed in the file, for example a Dimension then this would be available. However a dgnlib should not require elements be placed in the file.
Having selected the Pick property... from the Condition Editor dialog, in the search field type the Element Type required or alternatively select the 'Show All Elemenyt Types' tool.