Just an update, I did a repair install of SU and then restarted. Everything stayed the same.
And then I found this solution from TIG from 2023.
Do what Dave recommended about Repairs the app…
To get SKM files’ thumbnails to show their images in Windows Explorer try this…
Change the SKMs’ folder’s View to show [Extra] Large Icons.
Select one SKM file and right-click > context-menu > Open with…
Choose SketchUp Application and also tick the option to always use that app…
SketchUp will not open a SKM file directly, but the filetype associations should be fixed, and now your SKM files’ thumbnails should display their images.