BC337 transistor appears to be in active mode, but has too small Vbe
The value in the datasheet is a maximum value, so any value lower than 1.2 V is within the specified limits.

Furthermore, it is specified with 300 mA collector current, where your circuit is requires only about 1 mA collector current, so it's not suprising that you measure Vbe well below the 1.2 V value.

In fact, there's a typical curve provided:



That shows that around 0.6 V is expected when the collector current is this low.