Thanks for all the feedback everyone! Just to summarize and clarify to get a Touch UI component to appear in the side rail and design mode you must have the following:
- cq:dialog node (if the component is to be editable) [OPTIONAL]
- cq:editConfig [REQUIRED if you want it to appear in side rail/design mode]
Note: dialog.xml also works instead of cq:editConfig but since this is specific to Classic UI the approaches above should be utilized.