With all that you have gone through, the 30-hyperv.conf file did not seem to do anything so it could probably be removed.
Second VM would probably only need the switch from lightdm to gdm.
The grub menu probably can be changed by a simple reinstall of the latest kernel. sudo dnf reinstall kernel*5.15.6*fc35*
Before you do that you should do cat /etc/default/grub and verify there is a line in there that says GRUB_DEFAULT=saved. As long as that line is there a kernel install/reinstall will update the grub configuration (grub.cfg) and the last kernel installed will be the default for booting.
Just thinking about this point and your problems since the upgrade to f35 it seems likely that the upgrade did not complete cleanly since it never correctly booted after doing the upgrade, thus the grub config update was likely never done correctly/fully.
If reinstalling the kernel packages does not fix it then running sudo grub2-mkconfig -o /boot/grub2/grub.cfg should work.