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Hi Carlos, do we have time to fix this in 8.5 ? 

I can reproduce the same issue on 8.5.

gnome-settings-daemon-3.32.0-14.el8.x86_64

Steps to reproduce:
$ gsettings set org.gnome.settings-daemon.plugins.power sleep-inactive-ac-type logout
$ gsettings set org.gnome.settings-daemon.plugins.power sleep-inactive-ac-timeout 30
$ Wait for 30 seconds

Actual results:
A notification is shown, saying that the user will be logged out, but nothing happens.

Upstream this was changed to simply suppress the notification. i.e. the feature is just completely disabled inside VMs.

Wait, I was looking at the wrong commit (related to "logout" being disabled in GDM).

This was fixed upstream by https://gitlab.gnome.org/GNOME/gnome-settings-daemon/-/commit/c07ea84b54964ef95461047c53d358f4570e8808

gnome-settings-daemon-3.32.0-15.el8.x86_64

Since the problem described in this bug report should be
resolved in a recent advisory, it has been closed with a
resolution of ERRATA.

For information on the advisory (Moderate: GNOME security, bug fix, and enhancement update), and where to find the updated
files, follow the link below.

If the solution does not work for you, open a new bug report.

https://access.redhat.com/errata/RHSA-2021:4381