Isolate object doesn't work at all inside Envelope's 'Edit contents' mode
When you edit contents of an envelope distortion, using the dedicated button in Control to do so, Isolation is not possible. I somewhat understand what technical difficulties are behind this, but... this feature is not new. You should have completed it way long ago. It’s sad to see when integration between native tools is poor and unpolished.
I need to isolate whenever I need to, within envelopes, compound paths, type characters.