Only Jain and Buddhist should have the option available. When testing this, I don't have any issue. Newborn children seems to get the button just fine.
The character has to be of your dynasty for the button to show up. Is the character you are trying to appoint of your dynasty?
When the button show up, you have three condition that needs to apply in order to be available to appoint the character as your heir:
1. Succession laws need to be either gavelkind, primogeniture, ultimogeniture or open.
1. The character need to be eligible according to your succession gender laws.
2. The character need to be your child.
The character has to be of your dynasty for the button to show up. Is the character you are trying to appoint of your dynasty?
When the button show up, you have three condition that needs to apply in order to be available to appoint the character as your heir:
1. Succession laws need to be either gavelkind, primogeniture, ultimogeniture or open.
1. The character need to be eligible according to your succession gender laws.
2. The character need to be your child.