Description of problem:
On CNV v4.10.2, if you want to upgrade to 4.11 with k8s-nmstate, you must install the k8s-nmstate standalone operator (KNO).
After installing it, any change of placementConfiguration on HCO (and hence - on CNAO) is still applied on KNO. Any attempt to set placementConfiguration on KNO is overriden by CNAO.


Version-Release number of selected component (if applicable):
CNV v4.10.2
CNAO v4.10.2-3
HCO v4.10.2-2
nmstate 1.2.1-2.el8_6.x86_64


How reproducible:
Always


Steps to Reproduce:
1. Install KNO (if not already installed).
I am using the internal script https://gitlab.cee.redhat.com/contra/cnv-qe-automation/-/blob/master/nmstate/deploy.sh for that (don't forget to export CLUSTER_NAME and CLUSTER_DOMAIN first).

2. Edit HCO
$ oc edit hco kubevirt-hyperconverged -n openshift-cnv

3.Apply placementConfiguration on HCO, for example:
spec:
...
  workloads:
    nodePlacement:
      nodeSelector:
        kubernetes.io/hostname: <some cluster worker name>

4. Wait for the edited HCO to be applied, for example - by waiting for all pods in openshift-cnv namespace to be in "Running" state.
$ oc get pods -n openshift-cnv -w

5. Look for nmstate-handler pods -n openshift-nmstate namespace
$ oc get pods -n openshift-nmstate -o wide | grep handler


Actual results:
One pod only, on the node used for HCO placementConfiguration
nmstate-handler-zhgtz                   1/1     Running   0          6h36m   192.168.0.80   n-yoss-411-nnwnt-worker-0-sv22v   <none>           <none>


Expected results:
Should be an nmstate-handler pod for each cluster node
nmstate-handler-24sqm                   1/1     Running   0          28s   192.168.3.130   n-yoss-411-nnwnt-master-2         <none>           <none>
nmstate-handler-94gr2                   1/1     Running   0          28s   192.168.2.193   n-yoss-411-nnwnt-master-1         <none>           <none>
nmstate-handler-hjdjv                   1/1     Running   0          28s   192.168.0.155   n-yoss-411-nnwnt-worker-0-fsh8z   <none>           <none>
nmstate-handler-rbdm7                   1/1     Running   0          28s   192.168.3.199   n-yoss-411-nnwnt-worker-0-vklgn   <none>           <none>
nmstate-handler-rqnjh                   1/1     Running   0          28s   192.168.1.219   n-yoss-411-nnwnt-master-0         <none>           <none>
nmstate-handler-zf5z2                   1/1     Running   0          11s   192.168.0.80    n-yoss-411-nnwnt-worker-0-sv22v   <none>           <none>


Additional info:
My assumption is that this is a CNAO bug, therefore opened for CNV Network.