Accidentally, I had a similar problem myself recently. I believe I see USB debugging is enabled on your phone. Go into developer options and scroll 3/4 of the way down to the Drawing section. In there you have a setting called Display cutout. Change that to hide.
Alternatively, you can root your phone and install Magisk. Inside Magisk you can install a ...
On your picture, the 1st is for transferring files (MTP: Media Transfer Protocol), the 2nd is for comms via adb (also fastboot), the 3rd to use your phone as a modem to connect the PC to internet via your phone.
This fixed it for me using android 11
Run android emulator with
Android/Sdk/emulator/emulator -avd Pixel_5_API_30 -writable-system --writable-system
mount -o rw,remount -t ext4 /system
Make needed changes and change system back to read only with this
mount -o ro,remount -t ext4 /...