This version in preferences is a backwards compatibility mode. It will only change if/when there is a revision of the DNG sdk or another technical reason why a previous version of ACR/LR would require a new compatibility mode to work with images from a newer camera model(s).
To work with your Nikon D850 files in the current version of LR, you can use the 9.12.1 DNG Converter to select a folder of D850 NEF files and run the conversion with the compatibility mode set to ACR 7.1 (and any other settings you choose such as embedding the original raw, JPEG preview size, etc.). Once you convert the NEF files to DNG, you should be able to import the DNGs into LR.
Hope that helps.
Thank you for replying. That is indeed useful to know, However the problem persists, as the NEF files remain greyed out when I go to the DNG Converter directly and run that program. This happens regardless if I read from the XQD card or transfer the files to the desktop and try to read them. Same issue on my MacBook Pro.
Lightroom hasn't been updated yet to read the Nikon D850 nefs.
With the dng converter, when selecting the images to convert, one selects just the folder not the nef files inside.