Without looking at the whole configuration, I canβt confirm that this will work, but I would try adding a locator to make sure that it has captured this line and performed the conversion.
So instead of just
<authentication mode="Forms" xdt:Transform="Replace">
What will fit this in this way
Try
<authentication mode="Forms" xdt:Transform="Replace" xdt:Locator="Match(mode)">
which will explicitly take the auth node in this xpath, where mode = Forms, which should give 1 and only 1 match the conversion mechanism and do the replacement.
If this does not work, I would change it a little, if its conversion at all (which I doubt), changing the value of loginUrl ni to see if it comes out on the other side.
Most likely, you get a conversion error somewhere and just do not apply it.
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