If you dont define cq:allowedTemplates at /content/experience-fragments. then what AEM would do will list all the templates matching the regEx i.e. /content(/.*) . As experience-fragments is under /content, the regEx matches and the templates get displayed. The rendering logic can be found via this diagram
To make XF template available in the touch UI for creating experience fragments, you need to add experience fragment template in the allowed templates(cq:allowedTemplates = /conf/test-project/settings/wcm/templates/experience-fragment-web-variation) instead of allowedPaths on the/content/experience-fragments/<project>.
And then when you go to AEM start screen,http://localhost:4504/aem/start.html, click experience fragment then select the test-project folder and click create, XF template is available for selection.
As I can check in the Adobe documentation, it is mentioned that combining both cq:allowedTemplates and allowedPaths is not recommended and only cq:allowedTemplates should be used. combining them can lead to very complex rules that are difficult to track and manage.
Also, in AEM 6.4.3 combination of both was working but it was a product bug and that has been corrected in AEM 6.4.4 and now it is only recommended to use cq:allowedTemplates
For more information on this please check the below document also: