Hey, thanks for the detailed report. This is a known issue, a regression of a bug we already fixed before.
Duplicate thread: Cmd + M on Mac (minimize) no longer works due to default keybinding for `workbench.action.showAllEditors`
The team is aware and working on a fix. For now, the workaround you described, removing the keybinding via Cmd+K, Cmd+S, is the only option.