I have created a simple model on ArcGIS Pro 3.0 that selects by location and produces a clean output shapefile.
I have added the logical operator "If Selection Exists" (Layer name: Layer with selection, selection condition: Exists) to only run "copy features" and "delete fields" when any feature is selected (True) or to run a simple python script "Empty Output" that pops up a message when no features are selected (False). - I set preconditions for both True and False.
For some reasons when I tested the model in an area where there weren't any features that could be selected, the model still copied the feature (creating an empty shapefile) as if the conditions were true (and in fact it doesn't even run the Python script).