How do I resolve 'CCLibrary.app' background activity issue on Mac mini with grayed-out System Settings?

I have a 2023 Mac Mini with an Apple M2 chip, running Tahoe 26.1. Recently a small window appeared in the upper right corner: “App Background Activity “CCLibrary.app” can be run the the background. You can manage background activity in Login Items & Extensions.” (see screenshot).

I used Adobe Creative Cloud daily so I understand what CCLibrary.app is, but this clearly not an Adobe problem because I cannot “X” the small window. When I go to my System Settings, I find ALL my General settings, like Login Items & Extensions are grayed out and nonfunctional. I cannot even check to see if there’s a software update available.

I have used CleanMyMac software to diagnose the problem yet nothing changed. Simply restarting the computer doesn’t change anything.

Today I’m trying to determine any other things to try short of a clean install of the operating system.

[Re-Titled by Moderator]

Original Title: Mac Mini General System