With -ErrorAction Ignore you are in fact disabling the terminating exception.
So your code will never end in the Catch block.

If the cmdlet(s) you want to capture does/do not have a terminating exception, you must add -ErrorAction Stop.

That's what I thought. When I run the code, it actually ALWAYS enters the Catch block as shown here:

PS C:\Users\jmilano\Documents\PowerShell_Scripts\Datastores> C:\Users\jmilano\Documents\PowerShell_Scripts\TestTryCatch.ps1
Try this....
Try-Catch activated
Finally activated

I have the Try..Catch to capture all major terminating errors, however I have one command which i do NOT want to terminate on, I just want the code to continue running. The problem is that the code ALWAYS enters the Catch block and I cannot figger out why I.

Note: Get-Item does not have a location parameter so this should trigger an error which I want to ignore. This is for testing purposes atm.

Even testing from the command line, ErrorAction doesn't work:

PS C:\Users\jmilano\Documents\PowerShell_Scripts> get-item -location "c:\temp" -ErrorAction Continue
Get-Item : A parameter cannot be found that matches parameter name 'location'.
At line:1 char:10
+ get-item -location "c:\temp" -ErrorAction Continue
+          ~~~~~~~~~
    + CategoryInfo          : InvalidArgument: (:) [Get-Item], ParameterBindingException
    + FullyQualifiedErrorId : NamedParameterNotFound,Microsoft.PowerShell.Commands.GetItemCommand

PS C:\Users\jmilano\Documents\PowerShell_Scripts> get-item -location "c:\temp" -ErrorAction Ignore
Get-Item : A parameter cannot be found that matches parameter name 'location'.
At line:1 char:10
+ get-item -location "c:\temp" -ErrorAction Ignore
+          ~~~~~~~~~
    + CategoryInfo          : InvalidArgument: (:) [Get-Item], ParameterBindingException
    + FullyQualifiedErrorId : NamedParameterNotFound,Microsoft.PowerShell.Commands.GetItemCommand

PS C:\Users\jmilano\Documents\PowerShell_Scripts> get-item -location "c:\temp" -ErrorAction Inquire
Get-Item : A parameter cannot be found that matches parameter name 'location'.
At line:1 char:10
+ get-item -location "c:\temp" -ErrorAction Inquire
+          ~~~~~~~~~
    + CategoryInfo          : InvalidArgument: (:) [Get-Item], ParameterBindingException
    + FullyQualifiedErrorId : NamedParameterNotFound,Microsoft.PowerShell.Commands.GetItemCommand

PS C:\Users\jmilano\Documents\PowerShell_Scripts> get-item -location "c:\temp" -ErrorAction SilentlyContinue
Get-Item : A parameter cannot be found that matches parameter name 'location'.
At line:1 char:10
+ get-item -location "c:\temp" -ErrorAction SilentlyContinue
+          ~~~~~~~~~
    + CategoryInfo          : InvalidArgument: (:) [Get-Item], ParameterBindingException
    + FullyQualifiedErrorId : NamedParameterNotFound,Microsoft.PowerShell.Commands.GetItemCommand

The reason the Catch block is activated is because the Get-Item cmdlet does not have a Location parameter.
I suspect you mean to use the parameter Path there.

Also the Finally block is always executed, independent if there was an error or not.

So my code

Try { 
    Write-Host "Try this...."
    Get-Item -Path "C:\Temp" -ErrorAction Ignore
    Write-Host "Error ignored"
}
Catch {
    Write-Host "Try-Catch activated"
}
Finally {
    Write-Host "Finally activated"
}

Correctly shows

Try this....

    Directory: C:\

Mode                 LastWriteTime         Length Name
----                 -------------         ------ ----
d----           14-May-23    13:11                Temp
Error ignored
Finally activated

And if use a non-existing folder, thus provoking an error, I get

Try this....
Error ignored
Finally activated

No folder was found/listed

I was using Get-Item -Location "C:\Temp" because I wanted to create a terminating error, then using the -ErrorAction Ignore, I was hoping the code would ignore the error and continue running.

This is just my way of testing.

A syntax error is not a terminating exception.
That error is captured during the syntax check before the PS engine even starts executing the code.

encounter the same issue

There is no issue, it works as designed.
The test is incorrect, see my previous explanation of the difference between syntax checking and runtime exceptions.