Looks like either a tone mapping issue, or you have the windows desktop HDR slider set too bright.

You can try enabling the source tone mapping feature in the monitor menu.

Alternatively, you can adjust the HDR slider or try with and without the auto HDR feature of windows 11.

Forgot to mention there's currently an issue with the EOTF for HDR 1000 mode, so it would be best to stick to HDR 400 mode for better results.

Thanks for the suggestions.

I launched a game using HDR, and apparently the issue is not present in the game.  So the issue appears to only be on the windows desktop which means I can work around it.

I also found that when I turn HDR off, the colors end up being very saturated on the desktop and do not seem realistic.  So I was going through the color options and selecting sRGB made the colors seem more accurate to what they are intended to be.  And I noticed that the tone mapping issue  (black bars) was present with HDR off and sRGB selected.  So it is not an exclusively HDR problem.

The debugging I have done so far:
I was using an HDR profile with the minimum luminance set to 0. I tried changing it to 50 (one click higher) and maxing it to see if it fixed the problem and it did not.  I have set it back to minimum.

I already had enable source tone mapping enabled.  I tried disabling it then disabling console mode as well but the issue persisted so I turned them back on.  I tried turning auto HDR off and it also did not do anything.

I also tried a different display port cable to see if that was the issue but the issue persisted.

It doesn't appear to be as big of an issue as I thought, but I would still appreciate any suggestions as I would like to be able to look at pictures without the dark sections being completely mangled.

Did you download and install the ICM profile for the monitor? It's available on the Dell driver site.

As for desktop colors, Windows desktop normally conforms to the sRGB standard. If you switch to DCI-P3 the colors will be over saturated. 

In the Color Management tool I can select AW3423DWF.icm which I believe is the default dell ICM profile.  When I use the HDR Color application it creates a new .icc profile which I believe replaces the default dell profile.

Currently if I am in HDR mode, the colors look correct on the desktop (sRGB), but I am getting tone mapping issues in dark sections on the desktop.

If I have HDR off, the colors are over saturated.  At the moment no matter what color mode I switch to in the dell display manager (including sRGB) the colors do not change and stay over saturated.  Earlier today sRGB was the only mode that changed the colors at all (and made everything look normal) but it introduced the tone mapping issue.  When I switch color modes, I get the red text in the top left indicating the mode was switched, but nothing changes.

I don't use the display manager because I found it to be not working that great. Instead I use the monitor menu to switch settings. I also don't have AWCC installed.

I don't have awcc installed either.  I have tried turning dell display manager off and it doesnt seem to help.

When I turn HDR off, I cannot find the color settings in the monitor menu.  I did find I could set preset color settings to show up on the initial menu, but the color presets are greyed out and I cannot select them.

I have a feeling that my firmware update did not go smoothly and I need to fix it somehow.  I tried installing the firmware again, but it finished in a couple seconds as I am sure it saw it already had the same version installed and didn't do anything.