The screen shot in the question contains the following text at the bottom:
Your files apps and settings can't be kept because you've chosen to install Windows 11 using a different language than you're currently using.
I initially had the same message appear when attempt to upgrade from Windows 10 Pro to Windows 11.
It is down to the language used for the original Windows installation not matching that of the Windows 11 installer.
The first time ran the Windows 11 MediaCreationTool_Win11_23H2.exe selected Language : English (United Kingdom) as the language to download the installer ISO file for. That matched the local language.
On attempting to run the Windows 11 installer created for the English (United Kingdom) Language got the same issue in that the Keep personal files and apps option was grayed out.
The following in the Windows 10 Pro installation reports that the Default system UI language and System locale are both en-US which is English (United States):
C:\WINDOWS\system32>DISM /online /get-intl
Deployment Image Servicing and Management tool
Version: 10.0.19041.3636
Image Version: 10.0.19045.4529
Reporting online international settings.
Default system UI language : en-US
System locale : en-US
Default time zone : GMT Standard Time
Active keyboard(s) : 0809:00000809, 0409:00000809
Keyboard layered driver : PC/AT Enhanced Keyboard (101/102-Key)
Installed language(s): en-GB
Type : Partially localized language, MUI type.
Fallback Languages en-US
Installed language(s): en-US
Type : Fully localized language.
The operation completed successfully.
Re-ran the Windows 11 MediaCreationTool_Win11_23H2.exe and this time selected Language : English (United States). Running the Windows 11 installer created for the English (United States) Language. This time the Keep personal files and apps option was available:
