I just tested this on my own site and it works correctly, as expected.
There is something odd in your screenshot, namely that the length setting shows zero, and yet an excerpt is still being output for most of the posts.
I suspect the problem occurs because the very first post in the results—the one that you are designing the output with—has no post content, and so the block can't create an excerpt for that post and it messes with the settings.
I suggest that, while designing the View at least, you change the order settings so that some other post is the first post returned by the View, one which does have post content that can be used to generate an excerpt.