Having "Adjust display HDR mode" disabled results in HDR media being tonemapped to SDR whereas enabled implies the hardware is HDR capable (but while the TV might be, the kernel DRM layer says otherwise) so Kodi doesn't tonemap and you see the normal washed out colours when HDR media is used with an SDR colourspace.
K22 is a big improvement on the previous HDR experience in Kodi but a lot of the underlying logic and config options are still based on K21 capabilities so there's some cleanup/reworking needed. Hopefully by the time K23 ships that's been done; along with more of the kernel level support for colourspace/bit-depth being implemented and matured.