Intel breaks the ability to toggle retro scaling in the new Intel Graphics Software control panel, while it works fine in the old Arc Control software in case you did not remove it during driver update.
Just like what happened to my multiple previous reports, Intel customer support keeps claiming unable to reproduce the issue, despite it clearly suggests that the new Intel Graphics Software control panel is to blame.
Explore the software quality of Intel Graphics Software
The two slider should appear on “Display Scaling - Custom” mode only.
This tool allows you to toggle retro scaling on and off, without needing to use the old Arc Control software.
Extract and double-click igretroscale.exe to run the tool. Type a number or nothing then hit Enter upon the prompt.