As I was writting out the details of all the steps I took, I found a workaround.
After updating my teams I was unable to use GIFs. I made sure Optional Connected Experiences was on with no change.
Note: No GIFs or combined GIF menu.
This hit both my web and desktop client. a fresh install of teams fixed it until the update happened again.
I pulled up my "About Teams" and turned on Early Access: Public preview and the combined menu showed up:
Three dots next to your picture -> Settings -> About teams (bottom of the right hand menu) -> Early Access | Public preview
