I believe gateway updates carry forward your existing drivers, and if you delete the old driver (by deleting the .jar file in user-lib/jdbc within the installation directory), Ignition will default to using the bundled driver (9.4.0.jre11) after a restart. The bundled driver is at the system level, and your screenshot shows the core level.
What I would do is take a gateway backup, stop the gateway service, make a backup copy of your mssql-jdbc-7.2.1.jre11.jar file somewhere else and remove it from your installation directory, start the gateway service, then check config -> databases -> drivers for the Microsoft SQLServer JDBC driver (making sure it is 9.4.0.jre11). Check that all your SQL connections show as valid. From here I believe you could move into the Windows authentication portion.