Custom Checkbox Affecting Visibility

I am not sure if this is a bug or some issue from my side. But every new doc type i make, if the custom checkbox is not selected it doesn’t appear in the respective module. A post from another question told that this checkbox is to create the respective doc type files in the server. Why is the visibility of the doctype being affected ?
I have tried this in both development server as well as production , developer_mode set for both.
(Runs v5).
Can someone try to replicate this and confirm ?


This is the design.

For standard DocTypes, you choose the tab and sequence.