Yes, based on what I can find, your regression theory is technically plausible, but I cannot find solid information to confirm widespread Windows bug.
The strongest evidence is that both KBs contain a File History change. Microsoft says each update fixes File History automatic backups to SMB network shares that could fail with a false "invalid credentials" error. So both updates touched the same general backup functionality around the time your problem appeared. https://support.microsoft.com/en-us/servicing/os/windows-10/2026/08/kb5120249-windows-10-21h2-22h2-security-update
The fact that the files are still being backed up, but "Last backup" and Previous Versions are not updating until you reselect the same drive, also points more toward a File History catalog/state issue. You have also made a number of system-level changes in the past, including changes to system folders and the registry. Those kinds of modifications can affect File History behavior and make troubleshooting more complicated, so they are another variable that cannot be ruled out.