I received the below response from Jan Lua from tech support.
Just to clarify, are you adding the question bank to a quiz or to a knowledge check inside a lesson? If you are adding it to a quiz, the option will appear. On the other hand, if you are adding it to a knowledge check, the option will not appear. You cannot add an entire question bank to a knowledge check block, as it will only be one question. You can, however, add multiple knowledge check draw from question bank blocks.
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This solved my issue, I was using the knowledge check block, which is why the drop-down menu wasn’t showing. Once I added the quiz block, I was able to select the number of questions. Hope it helps.
Sent from Outlook for iOS