You havn't misunderstood.
A question, no rudeness intended
Are you 100% certain that all album tracks are not in the list? I ask this because you are sorting primarily by [Last Played] which will mean that the albums will not be grouped together in the list.
The rules I used to test for you are attached. This correctly includes album tracks otherwise excluded by the 'not in the last 60 days' rule.
If yours are really not listed, try simplifying. Start by removing the ~sort rules... does it work now? Keep simplifying until it does work, which will help identify what is breaking it, then you/we can look more closely into that to discover why.
-marko