Hey,
You cannot test the local file storage, which is actually an interesting UI bug in my eyes, you should not be able to click the button if S3 is not enabled, so please ignore this button, you cannot test the local file storage functionality with it.
Can you have a look at your /opt/mattermost/logs/mattermost.log file to see if there are any errors logged there when you try to upload a file in a channel? If so, can you post them here, please?
Also if possible please share the output of the following command:
jq .FileSettings /opt/mattermost/config/config.json