If anyone still has issues with this I figured it out for myself today and I think sharing my experience can save some of your time.
tldr: DefaultEngine.ini file was set to read only by Perforce and Unreal Editor’s UI kinda misled me to believe I set it to write mode
More detailed explanation:
If You’re using Perforce when You open Project Settings in Unreal Editor there’s short yellow information on top that informs You about an option to check out settings file, now You might think that this settings file is the only one for all the settings under “Project Settings” menu, but it’s not! The file You have an option to check out right after You open Project settings is: DefaultGame.ini and this file does not store information about trace channel settings! For trace channel settings You want to check out: DefaultEngine.ini (similiar name to DefaultGame.ini).
Now, if You select “Collision” settings from sidebar on the left You will get similiar to previous one yellow information on top that lets You select correct file to check out for trace channel settings, but if You used search bar on top of Project Settings to find trace channel settings this option does not appear.
I think Epic could improve UX here.