Edit: I updated my first post to better explain the exact steps.
I just did the mod again on my sons O3DS after a lot of difficulty, just to see how to get it working. Here are two steps I believe fixed the issue that I don't see on your post:
1. Make sure "Game Patching" is enabled in Luma...
Edit: OKAY! I'm going to leave my mess below because it's funny to me. I believe the solution is as follows:
1. Enable game patching in Luma (Hold select on 3DS power-on)
2. Create saltysd folder on sd root.
3. Create smash folder in saltysd. Make sure this is EMPTY.
4, Drop your code.ips in the...