No, I don't think you are missing anything, but you should be able to select menu items without a problem, especially with DVD content. Note that Fab Player has a user choice for "simple" or "Menu" mode in Settings. Is this something you have noticed with more than one title, or is it just one particular movie that exhibits this? I will try it also with some existing content.
UPDATE: works fine with the original disc and Full Disc rip of The Mummy (2017) DVD, Player v3.1.0.2
signals
I am backing up the first season of Nikita on Bluray.
All discs seam to have non-functioning menus, it's not like they don't show, they just aren't controllable.
Another thing I have noticed is that if I use simple mode to skip the menu entirely and play a chapter, it plays ridiculously slowly, like it will play 5-10 frames, then wait a second, play another 5-10 frames, wait a second and on and on.
Is there something I am missing here, does it need time to read the entire file, like offline buffering?