I actually found a suitable solution elsewhere at InDesignSecrets, buried in a comment from Daniel Rodney in response to this post:
https://creativepro.com/convert-numbering-to-text-in-indesign.php
First, I tried 12 different solutions to get KindleGen to work. Nothing would work. Amazon KDP forum and Amazon Support could not solve it. I was tempted to manually convert all numbered lists to text manually by typing 1 2 3 before the text, but I did not have the patience to do this thousands of times.
But then I found Daniel Rodney’s shortcut. This shortcut ruins your file, so Save the original file with a name like MyBookBeforeNumbersRemoved.indd. Then, Save As the file as MyBookNumbersToText.
Say that you are managing numbers with three paragraph styles:
NL
NL-RestartAt1
FigureNumbers
Select any paragraph that is NL (those are the ones that go 2, 3, 4…)
Open the Paragraph Styles pane. In the top right corner is a menu with an item called Convert NL Numbers to Text. Select this.
Repeat for NL-RestartAt1
Repeat for FigureNumbers
I took the time to add a Tab (^t) to each paragraph style, in the Bullets & Numbering:
Figure ^#^t
I also added a left-tab at the 1 inch mark in the Tab well (also in the Paragraph Styles)
I was able to convert thousands of numbers to text in about 5 minutes.
Then, export as ePub3.
Convert the ePub3 to Mobi using KindleGen.
Success! All of the numbers move down to the same line as the text.