I found another topic from 2024 that appears to be very close to my current experience. See "Double Click doesn't open an encrypted 7-Zip archive" including my own post I just added
I am currently experiencing the same symptoms in Windows 11 version 25H2. It did not happen until I did an in-place 25H2 upgrade to fix a number of corrupted system files that SFC and DISM commands could not repair or replace. Since the in-place upgrade, I must open 7-zip and navigate to the file with the internal file explorer. Then the encrypted file can be opened using the password I assigned. Just tapping on the .7z archive itself produces an error message every time. (See attachment)
All 7-zip encrypted archives will not open by double-tapping archive name