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Good question, I see that the setting is still there, and I remember trying to do this as well and actually you probably need to change the folder icon to a different icon altogether, unless you use a Windows 10 system and save those folders with the icons showing over the folder to onedrive, then they can sync to your Windows 11 device. I know this because I have several folders with floating icons over them on my desktop, most likely from Windows 10 and saved and synced to onedrive. Good Luck.
Please excuse, I meant to say, thank you for your reply . . . but you can't edit these things like on YouTube. Anyway, it should work just like on '10, '07 and 'XP. Either way, if I had to change the Icon to something else, it should be documented and that "Customize" tab needs to be modified.
We'll see how it plays out. Given my experience with Windows, it may take a year or so.