As we can see from your screenshot that you’ve enabled “Vendor can Publish Re-edited Product”. Basically there is a typo in this settings. If you enable this option then the product submitted by the vendor for the first time will go for admin approval . And again if that same product is submitted after making any changes or editing that product then it will get published without going for admin approval.
So kindly disable the option “Vendor can publish Re-edited Product” and check the flow again.
Do keep us posted.