Hello Maarten,
Thank you so much for the response and sorry to hear that the issue persists to happen.
However, to answer your question, yes, Surface Laptop 4 indeed supports DisplayPort Alternate Mode (DP alt mode) via its USB-C port. Since issue persisted after doing all those mentioned steps and also upong checking on this link: ASUS ZenScreen MB166C|Monitors|ASUS Philippines, there are no drivers for Windows 11 that you can download.
Thus, I recommend you contacting ASUS support to ask for further options and assistance on this matter.
It has been a pleasure assisting you and hopefully it helps.
Best wishes,
Rolando S.