I made a plugin that fixes this, try it out: https://figma.fun/hcNyUh

Just bind it to a shortcut and use that instead of a default button in the right panel.

Here is how it works:

Thanks for creating and sharing this fantastic little tool with us Gleb! The fact someone at Figma thought it would be a good idea to override settings like this is curious… and so, so frustrating. I love that the community comes to the rescue once again, though!

It’s really awesome and very cool.

I also created a post for this issue and reached out directly. This seems to be the reason for the issue:

"Based on what I can see in the engineering notes it looks like there was a change needed for elements in vertical auto layout frames to default to fill width when created, to clear some persistent issues. This then created some trickle down impacts for frames where the direction changed, which are especially noticeable and disruptive for frames with alternative settings than the defaults.

They agree that the problems this is causing are having a greater impact that we’d expect for any changes of this kind and as a result are looking at how best to have direction changes work as previously and we sincerely apologise for the disruption this causes in the interim."