Has default text "Add PFS Society Faction" rather than the faction selected
If in the PFS, faction is mandatory. It's at the top of the example character sheet (see PFS Guide).
If the top details on the output sheets followed the description checks so that items not checked did not appear and custom items added did appear, then it would be possible to add a custom "Faction" item and it would appear in the top details. You may need to make a few items mandatory.
Not an ideal solution as it would require the user to enter the faction in two places, but it does get it at the top of the sheet.
You select your faction on the Background tab. You don't need to add a template. If you are not seeing the choice, then you are not selecting the Pathfinder Society Guide to Organized Play source. This source is included in the two basic multi-sets "Pathfinder Society Core Assumption" and "Pathfinder Society". If you are using advanced sources you must add the source "Paizo Publishing > Pathfinder Society > Pathfinder Society Guide to Organized Play".
It works for me. If it isn't working then please provide the steps you've taken to reproduce the problem and if possible provide a character file that should have the faction selection, but does not.
The fact that it's not shown on the OS makes this a feature request. Not a bug. It was not added to the OS because the header of the PDF export has no convenient space. In addition, I really don't know how to do any of the OS programming. I have been using PCGen for my own characters and several of my wife's and my brothers. I have never had to have the faction shown on the OS. While I agree that it would be nice for it to show there, your implying that the required faction selection must be on the OS is an overstatement. While it is true that non-pregen character must have a faction, it is not true that it must be on the character sheet.
You are missing the data component that is the reason for this being a DATA bug, which I posted a code fix if it was necessary. If the Template is not required, then it should either be:
a) Hidden (for legacy support);
b) Removed completely (as it's useless code)
The Display on the OS is easy and is rightly a OS feature request. It would be nice if I had a VISUAL aid to see what the request is wanting, but that is another story.
Added a couple of screenshots to show the faction is correctly input but the output sheet doesn't show it.
I'll log my other comment as an enhancement request in case you want to get rid of the template.