Sitecore 10.3.1 - The requested document was not found due to alwaysExcludeVirtualFolder setting

I'm unsure if this is a 10.3.1 feature having side-effects so wanted to have a note for others. Today, I tried to access the package designer in one of my Sitecore 10.3.1 instance with SXA 10.3.0 and I got this RSOD.  I know what you are thinking, I don't have a life and I tampered with something, right? but believe me, I'm god fearing. So, I panicked since I didn't do anything wrong with the new instance. 

Just then I realised that a couple of days back, out of curiosity, I had set this alwaysExcludeVirtualFolder setting in Sitecore.config to true and left it that way. This seems to be the reason for the RSOD. So, if you are like me, don't fear, God is with us, 

 In Sitecore.config, Set alwaysExcludeVirtualFolder to false and retry, all should be fine again.

Setting alwaysExcludeVirtualFolder to true affects accessing these and many pages especially while opening as modal window from Desktop:

Development Tools

- PowerShell ISE

- Package Designer

- Installation Wizard

- Keyboard Map

Security:

- Access Viewer

- Domain Manager

- Role Manager

- Security Editor

- User Manager

Mostly, pages (opening as modal window) under applications folder might have an issue with the true setting:

Raised a Sitecore Case for this issue: CS0396018

Update from Sitecore:

"Based on the steps provided inside the article, I can confirmed that the behavior is reproducible on vanilla instance of Sitecore 10.3.1. Since this is not an expected behavior, we have registered this as a bug in the current version of Sitecore.

Unfortunately there is no immediate fix or workaround available for this issue but it will be considered for future releases by our Product Management team.

To track the future status of this bug report, please use the reference number 594740."