UPDATE: I have managed to resolve the immediate problem around the display of products. However, the issue in the ticket remains and as we have other sites affected also I look forward to hearing your take on what's going on.
Please check the section: "Easy Assigning of Templates and Archives to Products" with the above blog post.
Now, when you create an archive or a template, it’s applied. If there is no template or an archive for a particular item, the default WooCommerce templates are used instead.
There is no need to set any additional options on the Toolset → WooCommerce Blocks settings page anymore. Actually, that page became redundant so we removed it.