Respect the `should_remove_source_branch` parameter to the merge API

What does this MR do?

Fixes a piece of broken functionality and adds a test to prevent regressions

What are the relevant issue numbers?

Does this MR meet the acceptance criteria?

• Changelog entry added, if necessary
• Documentation created/updated via this MR
• Documentation reviewed by technical writer or follow-up review issue created
• Tests added for this feature/bug
• Tested in all supported browsers
• Conforms to the code review guidelines
• Conforms to the merge request performance guidelines
• Conforms to the style guides
• Conforms to the database guides
• Link to e2e tests MR added if this MR has Requires e2e tests label. See the Test Planning Process.
• Security reports checked/validated by reviewer

Closes #58020 (closed)