The "block Wireless when LAN connection exists" option does not trigger an "unauthorized device" pop-up. The way I set up my test machine, I get "unauthorised device" when I insert a USB memory stick, but when I disconnect and reconnect the network cable, WiFi gets disabled or reenabled with no pop-ups.
So whatever device is being blocked in your case, it shouldn't be WiFi - unless of course you have a USB connected WiFi device if such a thing exists. You need to find out what it is that is being blocked. Next time the device sends inventory, you'll have info about the blocking event in the inventory. You can then also go into the "advanced USB settings" to create a rule that allows the device.
One thing it could be is an integrated device that happens to be USB connected. Such as my laptop's fingerprint reader.
When you change a configuration, you need to create a new task and schedule it.
Thanks for the reply! When our LAN is disconnected from the laptop we can enable the wireless but then it shows as disabled right away. Thanks for the info on the inventory, I will look for that now!