I entered a retirement pension from being on the police force. I marked it as a PSO (public service officer) and it made the pension non-taxed. I think this is wrong?

When entering the Form 1099-R there are questions asked after entry of the form asking if your were a PSO.  If you selected you were a PSO there is another question asking you to enter the amount of health insurance paid, not to exceed $3,000.  That amount would have been deducted from the taxable amount of pension income reported in box 2a of the Form 1099-R and entered on the Form 1040 Line 5b with PSO entered on Line 5b.

This would not have eliminated all of your taxable pension unless it was $3,000 or less in box 2a.

Where are you seeing that the pension income is not being entered as taxable income?  On the Federal or State tax return?

On the federal tax return, Form 1040 Line 5b there should be a taxable amount entered.