I just pulled that image from google. Your version being newer or sporting a different theme shouldnt make any difference.
1060 is definitely new enough for Vulkan.
The only thing I might add is make sure, that you saved the config before exiting Retroarch and restarting. Retroarch has to do a clean start with Vulkan being set as the video driver in that driver section. So changing that 'option' while its booted, is not enough. And if you've booted it and it still shows GL - it means you havent saved the config.
Next steps would be to try different roms (only with OOT, or does it happen with all games?).
And/or try newer/older cores:
For Windows 64bit - try this one:
https://buildbot.libretro.com/nightly/windows/x86_64/latest/
( mupen64plus_next_libretro.dll.zip - unzip it and put the core file in the core folder)
For Windows 32bit try the core from here:
https://buildbot.libretro.com/nightly/windows/x86/latest/
If that doesnt work, you can try older cores from here:
https://buildbot.libretro.com/stable/
Also, before you do that, back up the core_options.cfg (or similar (didnt look up the actual file name)), open that up with a text editor and remove all mupen_next related settings. (Although unlikely - maybe there is a conflicting setting in there that causes that behavior). Then save the .cfg file.
And do all the testing with Vulkan being enabled as the video driver. (You can change it back to gl for other cores, but this one wants to run under Vulkan preferably.)
Also where is your screenshot of that version of the core from? And what OS are you on (I presumed Windows). That might give us an idea about whats going on here..
edit: Your graphic card drivers are up to date? (Roughly.) (If you are on a laptop, you might be bound to the manufacturers graphic card drivers.)
edit2: This could be the issue as well:
h**ps://old.reddit.com/r/RetroArch/comments/igslpp/beetle_psx_hw_not_using_correct_gpu/ (If your GPU also comes with integrated graphics. Although I never had this happen on any of my machines.)
edit3: Also make sure shaders are turned off. Look for the shaders option while the game is running,
lower the shader passes to 0 then hit apply,
then restart the game.
edit4: If nothing in here works out, and no one else has an idea what might be causing that behavior, head over to retroarchs own forums and report the behavior. But do the troubleshooting first..