Currently it's not clear to me why your first version doesn't work.
First I thought the second Menu action was too fast, because when testing it with TextEdit KM gave me a notification that the Copy menu was disabled. I added a Pause before the Select All / Copy action, the notification went away, but it still didn't work.
This has been discussed here.
In short: Smartening single quotes is not as easy as smartening double quotes because of the apostrophes (see the examples in the linked thread).
However, as mentioned in the thread, there are existing solutions that work well in 98% of the cases. And as you can see by my last post in that thread, I also think that one of these solutions should be implemented – despite not being perfect (in some edge cases).