Also, if you look at <some image sites> it does appear that they use Google adsense inside of the modal window. Anyone see any other sites that do this?

[edited by: not2easy at 1:00 pm (utc) on May 30, 2020]
[edit reason] specifics/ToS [/edit]

The simple answer to your question is "No" it is not allowed to show an ad in a modal, and not even achievable due to technical reasons.

The more nuanced and complete answer is that it is potentially possible, but you will likely need to use Ad Manager to do it.

I should start by saying that the policy states that you are not allowed to draw attention to the ads, placing an ad in a modal theory violates this policy. But if the modal has other content and can be considered a "page", basically as you describe, it may be acceptable. It becomes a grey area.

The other issue is that AdSense ads are called at page load, if the ad is on the page when the function call is made the ad will not appear. You can make the call a second time when your modal appears but calling the function twice will reload all the ads, causing existing ads to be hidden by new ones. No a good situation. To get around this you would need to implement Ad Manager that provides the flexibility of loading ads individually and based on user events.

If you have a Single Page App pattern you encounter the exact same situation, but instead of the content being visibly above the previous page like a modal, the content is simply replaced on the page, and AdSense is accepted for such websites, albeit using the AdManager work around. Practically the difference is only one of UI,

in addition to what NickMNS said, it is also prohibited to place adsense over content, which could be the base with a modal.