It needs to be checked in order to see the option to Hide or Show Music in the Cloud on the View dropdown. I just tested that on my Mac, and when I unchecked it, the option as shown in my post above goes away. Checked, it comes back.
Not sure why it's not working as it should but here is what I would recommend:
1. Try checking the option in preferences, and see if the Hide/Show option displays in the View Dropdown. If it does, try checking and unchecking it in the dropdown to see if anything changes (you will be able to see it immediately if it does).
2. Reboot your PC. Last night (when everything was at a virtual standstill on the Apple servers because the entire world was doing stuff on them all at the same time....), I looked at my iTunes library and saw that the cloud items were showing. So, I clicked on Hide Music in the Cloud, and they disappeared. So, I wanted them back, and clicked Show Music in the Cloud, and they didn't come back 😟 I thought I would wait until this morning to see if they had come back yet, knowing that the Cloud server was probably as slammed as the rest of them....this morning they were back!!! 🙂
So, the issues you may be having may just be a hang up with the Cloud, and a reboot may clear that up. (You could also just try signing out and back into iTunes before rebooting to see if that has any effect).
We are all kind of groping around at this point trying to get the specifics down for the new iTunes and how it works for both Windows and Mac. So, any help you can provide by trying any of the suggestions above would be most helpful (if any of them work...fingers crossed!)
Thanks and cheers,
GB