Seems like it wants to do a projection, but the values aren't right. That could be anything from adjusting the scale of your mesh, the projection values, or disabling projection.
One thing that will probably cause more issues than it's worth is that with the steps you listed, your resulting extraction is going to have an inside (which can definitely get in the way of projecting, and even dynamesh if it is too thin). You might be better off changing the extraction settings to that you don't wind up with a double-sided mesh, cap the ends (because dynamesh still requires a volume), and then dynamesh.
It's not the projection giving problems. It's because the mesh has a thickness to it. So when you sculpt the outside you're also sculpting the inside and without you noticing it the faces start touching each other. Then when you re-dynamesh it, it confuses the dynamesh and starts creating holes. When you use extract and it's very thin you wanna delete the inside of that extracted mesh to avoid these kind of problems.
If for some reason you really need that inside of the mesh there you might wanna make it a different polygroup so you can easily hide/mask the inside of the mesh.
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One thing that will probably cause more issues than it's worth is that with the steps you listed, your resulting extraction is going to have an inside (which can definitely get in the way of projecting, and even dynamesh if it is too thin). You might be better off changing the extraction settings to that you don't wind up with a double-sided mesh, cap the ends (because dynamesh still requires a volume), and then dynamesh.
If for some reason you really need that inside of the mesh there you might wanna make it a different polygroup so you can easily hide/mask the inside of the mesh.