when building beacons in the nether, beacons will not allow for effect selection. This is not due to player made blocks above. The issue seems to be chunk related as the boundary between working beacons and broken beacons always falls along a chunk boundary. The attached image shows a small test area where netherrack represents broken beacon locations and exposed beacons represent functioning ones. as you can see, it is consistently along chunk borders with the exception of one block.