As per the title, the setting "start undressed" in the dressing room does not do anything - everytime I'd preview an item, my character will be dressed and I'd have to click the "Undress" button everytime. This behavior has been happening since forever, not something recent.

It looks like there is an issue when trying to preview an item not from the collection journal. When you preview an item from there the dressing room model starts undressed. I'll look into it further when I have some additional time.