Am I mishearing, or does the λ take on a /j/ sound here?
It's probably a [ʎ] (turned-y) sound, similar to Italian gl in figlio: a sound that's not present in most English accents.
Kind of a mixed [l] and [j], or a palatalised [l].
In various languages, the sound is apt to turn into a [j] sound, e.g. Hungarian ly.
is there a rule for when λ does this?
Before an /i/ sound, or before a letter representing the /i/ sound followed by another vowel -- for example, ήλιος is pronounced ['iʎos], with no /i/ sound in it.
Have a look at https://www.foundalis.com/lan/grphdetl.htm#p_palatalization .