Auto update does not seem to respect the CheckForUpdatesOnLaunch setting

I've got a side-loaded appx that I am trying to disable the check for updates on start - but I do want it to do the background check.

This is what the update settings look like:

PS C:\Users\Administrator> Get-AppxPackageAutoUpdateSettings -PackageFamilyName xxx_yyyy                                                                                                                                                                                                                                  PackageFullName                         : xxxx_0.0.0.9_x64__yyyy                                    
PackageFamilyName                       : xxx_yyyy
AppInstallerUri                         : https://xxxx.xxx.xx/yyyy.AppInstaller
UpdateUris                              : {}
RepairUris                              : {}
OptionalPackageUris                     : {}
DependencyPackageUris                   : {}
CheckForUpdatesOnLaunch                 : False
ShowPromptOnLaunchWhenUpdateIsAvailable : False
UpdateBlocksActivation                  : False
AutomaticBackgroundTaskUpdatesEnabled   : True
ForceUpdateFromAnyVerion                : False
IsAutoRepairEnabled                     : False
HoursBetweenUpdateChecks                : 24
PausedUntil                             :
PolicySource                            : Default
LastCheckedForUpdates                   : 1/24/2025 7:02:44 AM +00:00
Version                                 : 0.0.0.9

But it is still popping up a big dialog box every time I start the app:

This would be ok, except that I would like to run an executable in a Task Scheduler task that needs to be able to run with the user not logged in, and that is failing with some sort of access problem when the check for updates happens.

If I remove the auto update settings entirely it works fine:

i.e.

Remove-AppxPackageAutoUpdateSettings -PackageFamilyName xxx_yyyy

Am I doing something wrong here? Please let me know!

Reproduce the behavior with Get-AppxPackageAutoUpdateSettings using CheckForUpdatesOnLaunch set to False and AutomaticBackgroundTaskUpdatesEnabled set to True, then compare it with Remove-AppxPackageAutoUpdateSettings. Done means launching the side-loaded app no longer shows the update dialog while background update checks remain enabled.