It’s indeed working now. This is exactly what I did previously (3 times precisely), but now it works. Maybe the update doesn’t actually update everything, just the bare minimum and completes the rest in background.
Your OS is now updated. the updated applications that comprise iOS 17 then have to check and update the data, particularly in cases where other devices tied to iCloud also require updating.
It is likely that if you also have a Mac or iPad that isn't using the most recent point releases, the lists or the Photos will not update to the new behavior.