I want to return true as an output from the suggestion function if the entered code doesn’t match any existing ones, so I can use it as an output.

 viping678842  Could you please provide more details, such as the code and the exact issue you are facing? If possible, include a screenshot. It's difficult to understand the issue with the given details

I'm using a custom picker for the Project Code field. If the user enters a new value not found in existing data, dependent fields should become editable. So I need the rule to return both the suggestion dataset and a flag indicating it's a new entry.

This is my code in interface code

Need more details on the requirement but wrote a simple code to enable/disable dependent  fields based on user entered value . I am checking the entered value against data in my local variable you can optimize this with your real time data

a!localVariables(
  local!existingCodes: { "ABC", "DEF", "GHI" },
  local!var1,
  local!isvar1present: a!refreshVariable(
    value: if(
      a!isNullOrEmpty(local!var1),
      false,
      contains(local!existingCodes, local!var1)
    )
  ),
  {
    a!cardLayout(
      contents: {
        a!textField(
          label: "Text",
          labelPosition: "ABOVE",
          value: local!var1,
          saveInto: { local!var1 },
          refreshAfter: "UNFOCUS",
          validations: {},
          instructions: if(local!isvar1present,"Entered Value is already present","")
        )
      },
      height: "AUTO",
      style: "TRANSPARENT",
      marginBelow: "STANDARD"
    ),
    a!textField(
      label: "Text",
      labelPosition: "ABOVE",
      saveInto: {},
      disabled: if(
        a!isNullOrEmpty(local!var1),
        true,
    local!isvar1present
      ),
      refreshAfter: "UNFOCUS",
      validations: {}
    ),
    a!textField(
      label: "Text",
      labelPosition: "ABOVE",
      saveInto: {},
      disabled: if(
        a!isNullOrEmpty(local!var1),
        true,
       local!isvar1present
      ),
      refreshAfter: "UNFOCUS",
      validations: {}
    ),
    a!textField(
      label: "Text",
      labelPosition: "ABOVE",
      saveInto: {},
      disabled: if(
        a!isNullOrEmpty(local!var1),
        true,
       local!isvar1present
      ),
      refreshAfter: "UNFOCUS",
      validations: {}
    )
  }
)

You can't use the picker field as a text field to enter new values. You can instead provide a value as 'New' or 'Other' in your project code list and when user selected Other then show rest of fields to get new entry details. 

Create new items using a picker? Here: appian.rocks/.../