I have 24H2, and my Navigation pane is looking as expected. It contains Documents, Home, and other quick access folders. If I expand "Home" I see Desktop, Documents, Downloads, Pictures, and other quick access folders.
In addition to "Show all folders" I also enabled "Expand to open folder"
My configuration:
File Explorer > ... > Options > View tab > Navigation pane >
Unchecked: Always show availability status
Checked: Expand to open folder
Checked: Show all folders
Unchecked: Show libraries
Unchecked: Show network
Checked: Show This PC
Show all folders in addition to Expand to open folder actually seems to work (ensuring that the open folder is always expanded in the left pane) on 23H2 (I have not had the courage to install 24H2 yet due to the flood of bugs; they tried to force-install it, so I force-stopped it).
It was an option I had tried before, but it didn't give the expected result until now. The interaction between these two settings is somewhat obscure, but that's par for the course with Microsoft. Microsoft makes simple things complicated.