Hi All,
I am also experiencing the same issue with the new laptops we setup which are practically Windows 11 out of the box.
One thing I found out as a Fix is that if you set the following group policy to Disabled and do a gpupdate /force it changes to Overwrite events as needed on event viewer.
Go to Edit Group policy on the target computer
Select Computer Configuration > Administrative Templates > Windows Component > Event Log Service > Security > Control Event Log Behavior when the log file reaches its maximum size, Ser it to Disable.
For now my log size is 100096KB and is already reached to its maximum size but still the option on my Event Viewer is set to Overwrite events as needed with the above change I made.
Please try the Fix I suggested and let me know the results.