I had the same Software Settings set and my up to date Ventura SSD which got updated today to Sonoma when I change my Start Up disk to my Sonoma SSD and selected Restart. For some reason Software Update thinks Download new updates when available is now Download upgrades. First time for me a macOS upgrade happened without my permission. Ouch what a PITA..Someone asked for a screenshot of my disk util (I wiped it clean before my Ventura downgrade. Also attached the update settings. Definitely didn't tell my Venture install to upgrade to Sonoma.
The fact that more people experienced a similar thing tells me I'm not crazy after all lol.
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