We have a retention policy in place for all SharePoint sites (retain items for 2 years starting from when the items were last modified). I tried testing recovery today by deleting a single docx file in a document library. I deleted it from the recycle bin and also the second stage recycle bin.
I ran a content search on that particular site using keywords file lastmodifiedtime>=10/12/2021,filetype:docx, and filename:Data*
It will not locate it. It finds other files (using OR condition), but not that particular file. I thought retention would keep a copy of it based on the settings no matter if it was completely deleted or not. And, yes, I have had this policy enabled for months now.
*EDIT* I would also like to add that I do not see a Preservation Hold Library under Site Contents, even though I am a site collection admin. That makes me think the retention policy isn't applying. We created the policy under Compliance Center > Information Governance > Retention Policies (not labels). The actually policy is only applied to SharePoint sites (ALL). Again, it is retaining the data based on last modified and to keep for 2 years (do nothing after 2 years).