This conversation has been merged. Please reference the main conversation: Photoshop: Gradients with alpha transparency behaving inconsistently
This is happening on Photoshop 20.0.4. For some reason, the top layer's layer style of Pattern Overlay scales the opacity incorrectly if the pattern contains transparency and there's a drop shadow effect enabled somewhere, such as on an empty group.
This bug seems similar to the one I reported before that had to do with gradient overlays. Yes, the workaround for now is to enable Legacy Compositing. But it makes designing difficult because it's hard to tell what's correct and what's due to this bug.