Did you ever resolve this? I have the same issue when migrating from .net 6 in-process to .net 8 isolated. Initially when I deployed using a DevOps pipeline the functions weren't even appearing. So I deployed from Visual Studio and that worked. I realised that I had to manually set the FUNCTIONS_WORKER_RUNTIME to dotnet-isolated, restart the app and then change to .Net 8 Isolated from the dropdown. I did this in another environment, deployed using DevOps and the new, upgraded functions appear, but I'm getting the warning

The 'FUNCTIONS_WORKER_RUNTIME' is set to 'dotnet-isolated', which does not match the worker runtime metadata found in the deployed function app artifacts

I'm not getting this in the environment where I published using Visual Studio. There's obviously something different, but I can't see what. All variables and config look the same between the 2.