Hmm. It was re-enabled somehow even though it was showing disabled via the settings menu. UX problem, this menu only appears on hover, it should appear on click. Clicking the struck through cursor tab enables it, clicking again does nothing (shouldnt it be a toggle if click is the action?). I would’ve never found this menu had you not had a screenshot and I was wondering just how the heck to get it to show..
Yes, it can be confusing. However, this window appears on hover, and we might improve it in future versions. Additionally, you can disable the Cursor Tab through the command palette.
