Worked, but I had to add a final step.
ty for the help everyone :)
Oh, that was it! After restarting OBS the solution from OP worked.
Also, there is a quick an easy way... but it adds some minor audio lag:
1. Add the Video Capture Device.
2. In the Video Capture Device settings scroll down to Audio Autput Mode and select Audio Desktop Output (Either DirectSound or DirectWav).
3. Click the checkbox for "use custom audio device" and then as audio device select the capture card.
4. Click OK.
Now, When I do this with my Switch 2 it sometimes does not work inmediately and I need to pull the Switch from the dock and then put it back, or restart OBS and readd the capture card to sources. There is like a 3/4 of a second delay for me when using that method. It seems there is no delay when using OP's one.