So I found a “fix” for this. Stopped/abort the server, went to main menu and updated the instance itself. Once it was done it came back and auto started the server.
I am not running mine in a docker so i cannot speak to that portion of the step.
I was able to reproduce this with another server i waited to update on 8hrs later so there was no change the steam update that addressed this.
From Greelan - Startup Issue with Palworld - The server does not start - #2 by Greelan
"Greelan
6h
From the Main Menu screen (which shows all your instances):
Right click on the instance, Edit Settings
Turn off “Run in Docker Container”
Save changes. Wait until finished
Right click on the instance, Update. Wait until finished
Right click on the instance, Edit Settings, turn on “Run in Docker Container”. Save changes and wait until finished
Start the instance if not running, then Manage it
Find the “Community Server” setting, turn it off and on a couple of times
Done"