The results are expected.
recycle_bin_file_system=1 (the default value)
The raw recycle bin filename is used.
For example:
C:\$recycle.bin\S-1-5-21-01234567879-01234567879-012345678-1001\$RABC123.txt
This allows you to open files from the recycle bin in programs as a normal file system path is used.
recycle_bin_file_system=0
The virtual recycle bin filename is used.
For example:
Computer\Local Disk (C:)\$RECYCLE.BIN\Recycle Bin\New Text Document.txt
This will have the correct display name.
Some programs will not understand the virtual recycle bin path.
It would be nice if copy-pasting used the display name instead of the $RABC123.ext filename when recycle_bin_file_system=1.
It would require some copy-pasting hooks to fix.
I will consider an option to do this.