Gitlab Duo completely disabled with no way to override if instance configured to "off by default"

Summary

If instance settings fot GitLab Duo is "off by default", GitLab Duo does not work despite group/project settings being set on. Project/group setting is configurable, but ignored.

What is the current bug behavior?

"Off by default" instance setting behaves like complete shutdown.

What is the expected correct behavior?

"Off by default" still allows projects to configure desired behavior.

Output of checks

Results of GitLab environment info

Expand for output related to GitLab environment info

root@gitlab-dev:~# sudo gitlab-rake gitlab:env:info

System information
System:		Ubuntu 24.04
Proxy:		no
Current User:	git
Using RVM:	no
Ruby Version:	3.2.5
Gem Version:	3.5.23
Bundler Version:2.5.11
Rake Version:	13.0.6
Redis Version:	7.0.15
Sidekiq Version:7.2.4
Go Version:	unknown

GitLab information
Version:	17.7.0-ee
Revision:	1fd574ee571
Directory:	/opt/gitlab/embedded/service/gitlab-rails
DB Adapter:	PostgreSQL
DB Version:	14.11
URL:		https://gitlab-dev.ict.fit.cvut.cz
HTTP Clone URL:	https://gitlab-dev.ict.fit.cvut.cz/some-group/some-project.git
SSH Clone URL:	git@gitlab-dev.ict.fit.cvut.cz:some-group/some-project.git
Elasticsearch:	no
Geo:		no
Using LDAP:	yes
Using Omniauth:	yes
Omniauth Providers: azure_activedirectory_v2

GitLab Shell
Version:	14.39.0
Repository storages:
- default: 	unix:/var/opt/gitlab/gitaly/gitaly.socket
GitLab Shell path:		/opt/gitlab/embedded/service/gitlab-shell

Gitaly
- default Address: 	unix:/var/opt/gitlab/gitaly/gitaly.socket
- default Version: 	17.7.0
- default Git Version: 	2.47.0

Possible fixes

Use "on by default".

Workaround which fixes bug is mentioned in comment #510755 (comment 2270878119)