Despite my recommendation to manually archive old messages, the CEO insisted on using AutoArchive which I had to set up with a new pst file quarter so the pst wouldn't get too big.
Several times a year, the CEO would call me to tell me that some emails are not AutoArchiving according to the date received. I had to re-explain that (as you found out), AutoArchive works on the date
modified not the date received.
It's job security I guess.

One other "gotcha" is that you can set a message to "Do not AutoArchive".
Options > More Options > Do not AutoArchive.
I don't understand how that is useful but you have to manually archive those.