I got it fixed. It most likely happened because I used SDDM with Wayland according to https://wiki.archlinux.org/title/SDDM#Wayland:
/etc/sddm.conf.d/10-wayland.conf
[General]
DisplayServer=wayland
GreeterEnvironment=QT_WAYLAND_SHELL_INTEGRATION=layer-shell
[Wayland]
CompositorCommand=kwin_wayland --drm --no-lockscreen --no-global-shortcuts --locale1
I had to follow ’ Match Plasma display configuration’ on the same page:
cp ~/.config/kwinoutputconfig.json /var/lib/sddm/.config/
chown sddm:sddm /var/lib/sddm/.config/kwinoutputconfig.json
Still not sure why it worked on all subsequent uses after the first login, but at least it’s fixed now. No, it’s not fixed. Still way too large elements. They don’t overlap now which is a plus, but they are still too big.