Fixed.
In my testing this problem affects macOS 11 (Big Sur) and 12 (Monterey) clients but does not affect 10.14 (Mojave) clients.
So after a painstaking process (ie. using a specific client and excluding specific Configuration Policies on-by-one then restarting) I was able to narrow the problem down to a specific Configuration Profile.
I was then able to narrow it down to a specific payload within the Config Profile.
I found that 'Finder' payload also pushes out 'Login Window Preferences' settings. These settings can be seen in System Preference > Profiles > MyProfileName as soon as the Finder payload is created and saved.
On deleting the Finder payload from the relevant Config Profile & saving the changes the Login Window Settings are immediately removed from the Profile on the client. After a restart the 'Change Password...' boxes are no longer greyed out and users can change their passwords.
I have not drilled down further to see if a specific setting in the Finder payload causes this problem. For now I have just deactivated the Finder payload and my users can change passwords once again.
TLDR: A quick fix is to remove any Finder payloads within Configuration Profiles you may be using.