Categories not showing for Custom Post Types

I created a custom post type using ACF and linked categories to that post type. However, when I attempt to add a new post, I can’t see the specific categories I created for that post type; instead, I only see the default post type categories. I can assign categories through the quick edit option, but why is this happening?

This issue may be related to above. How can I display a list of categories for custom post types in the header menu? I’d like the menu to show all the categories for custom post types when someone hovers over the categories.