Updated today to DaVinci Resolve 17.1 and blanking fill stopped working in all of my existing videos. Also, when I delete Blanking Fill and add it again, the blanking fill effect is not been added to top/bottom. Top and bottom in my video is simply "empty space", video content is zoomed, so top and bottom has empty space for blanking fill. And before, this space was filled with "blanking fill" effect.
If you need more detailed steps to reproduce the bug, please let me know. For now, it seems for me that nothing special is needed, and blanking fill for empty space on top and bottom is not working in general.
Blanking fill is also not working on my Mac version, however the bug simply opens up behind the photo and will not expand into the alpha area surrounding it. This seems like a separate failure condition than what your experiencing if I understand you correctly.