You say that this is fixed, I'm curious if you're seeing the same behavior I am with our self-hosted gitlab.
When an event triggers a build, it triggers xcode cloud and the status is set to pending or running. After a few minutes, the status then changes to passed, and everything looks good to go. However, after a minute or two, the status changes back to pending. As far as I can tell, I didn't use confidential when I set up the key originally, however I'm not sure that there's a visible flag for that after the fact.
Also: how did you change the Confidential setting? The only place I can see it is on the Applications settings, and those don't appear to be changeable after the connection is established, which xcode cloud seems to do automatically.