Anthonymelwhrhs ,
>>Is this interop bug guaranteed to happen?
It is a near certainty based on all reproes I have looked at. The other prereqs are that 1) the device also has to have the legacy LAPS policy installed prior to the install of the legacy LAPS MSI, and 2) Windows LAPS has to have already noticed the legacy LAPS policy and enforced it, ie set a password on the legacy LAPS AD attribute and on the local account.
If you did not apply the legacy LAPS policy until after the legacy LAPS MSI pkg was installed, then you will not run into it (Windows LAPS will defer to legacy LAPS). Maybe that is what happened in your case? Are you using a staging OU for the intial domain-join?
The Windows LAPS event log should tell the exact story. If you want to, please run Get-LapsDiagnostics cmdlet and send me a private message with the zip file - then I can probably tell you the history of how it did or didn't happen on that device.