I think this is a matter of imprecise documentation.

This setting was added for T5688: Kleopatra: Configure to hide CSR creation with commit rKLEOPATRAc36353558721: Add setting for (dis)allowing signatures with S/MIME certificates. As the commit message explains

This setting can be used to hide the functionality to sign the clipboard content with an S/MIME certificate independent of the setting for disabling CMS completely.

The only effect is that the action S/MIME-Sign... is shown/hidden in the Clipboard submenu (under Tools and in the system tray). I don't remember why this setting was added in the first place just to disable the Clipboard action. The documentation indeed suggests that it does more.

For Gpg4win 5 we have cleaned up the Clipboard menu and instead of separate "S/MIME-Sign..." and "OpenPGP-Sign..." there's now only "Sign..." which means the setting is obsolete and should be removed. In VSD 3.x the settings still works as indented.

Regarding:

deactivated (grayed out) in Notepad

I think this has nothing to do with the setting. In Notepad one can either Sign with S/MIME or Encrypt with S/MIME. If any Encrypt option is checked then Sign is disabled (and vice versa).