the one thing I do notice is the encryption salt is not the same in the working dir yaml file versus in the local backend state file

That sounds like the secret stores got mixed up somewhere. If you can write up the operations your doing to get to that state we can take a look.

Hey Fraser, thanks for the reply 🙂 I traced it back to an existing issue: https://github.com/pulumi/pulumi/issues/7282

Ah I was just looking at that issue! Was gonna see if it was a quick fix when I got 10 minutes spare.