Hello peebee!
Thanks for quick reply!
I will check out what yout wrote, both nouveau issue and your 6.7.1 kernel with aufs. I have a hybrid graphics notebook based on 9gen intel i5-9300H CPU, and it's IGP intel UHD 630 and with Nvidia GTX 1050Ti GPU with 4GB GDDR5. Earlier I worte about this VGA switching problem here: viewtopic.php?p=65130#p65130
So I using default nouveau and intel DRI_PRIME swtich instead of Nvidia driver and because I was not able to install on any way Nvidia native drivers to solve the main problem which is VGA-switching.
The only thing I can test is that I have a LED indicating on which GPU is currently used: Blue if intel, Red if Nvidia and I have a shell script based on ffplay and DRI_PRIME - I will check if the nouveau option has issues! But I did not recognized any problem of nouveau maybe another GPU family I have, or maybe because the VGA switching mechanism. The topic where I wrote about nvidia optimus, there are some links which are not alive already... so the kernel paramter was previously
and the kernel config to geenrally set it to disabled by searching to mmconfig and change value in kernel config to not set with hashtag at the beginning of line.
Anyway later I will write a feedback about this with picture under this line - in this comment:
OK I've tested my lqx1-k6.7.1 and your k6.7.1-lxpup64 kernel with DRI_PRIME both 0 (intel) and 1 (nouveau) and I haven't experienced any problem during the tests. I've cheked glxgears and a video playback with nouveau DRI_PRIME setup too without any problem on my dual graphics machine.
The above mentioned mmconfig at me is look like this:
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#
# Bus options (PCI etc.)
#
CONFIG_PCI_DIRECT=y
# CONFIG_PCI_MMCONFIG is not set
# CONFIG_PCI_CNB20LE_QUIRK is not set
CONFIG_ISA_BUS=y
CONFIG_ISA_DMA_API=y
CONFIG_AMD_NB=y
# end of Bus options (PCI etc.)
and it is beacuse if enabled then dmesg has a lots of this section after boot:
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[ 148.004576] pcieport 0000:00:1d.6: AER: Corrected error received: 0000:03:00.0
[ 148.004592] alx 0000:03:00.0: PCIe Bus Error: severity=Corrected, type=Data Link Layer, (Receiver ID)
[ 148.004593] alx 0000:03:00.0: device [1969:10a1] error status/mask=00000080/00002000
[ 148.004595] alx 0000:03:00.0: [ 7] BadDLLP
#
aufs seems work well with your kernel so thanks for this too and here are the results of glxgears with that kernel too:
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# DRI_PRIME=1 vblank_mode=0 glxgears
ATTENTION: default value of option vblank_mode overridden by environment.
16480 frames in 5.0 seconds = 3295.836 FPS
16463 frames in 5.0 seconds = 3292.510 FPS
16473 frames in 5.0 seconds = 3294.522 FPS
16500 frames in 5.0 seconds = 3299.821 FPS
^C
# DRI_PRIME=0 vblank_mode=0 glxgears
ATTENTION: default value of option vblank_mode overridden by environment.
46299 frames in 5.0 seconds = 9259.721 FPS
47978 frames in 5.0 seconds = 9595.455 FPS
47918 frames in 5.0 seconds = 9583.481 FPS
47966 frames in 5.0 seconds = 9593.161 FPS
^C
Here nouveau results are less values but they always were. (quicksetup says modesetting video driver is currently being used.) And during video playback no issues detected by me with nouveau option:

- Screenshot.jpg (33.62 KiB) Viewed 3683 times
I'm not really sure but I think your issue with nouveau is GPU family specific maybe.
And here is a (unfortunately Hungarian lanuguage) video about how to make correct fdrv sfs. Maybe it helps too.
https://youtu.be/bpr49oTcWIw?si=2GmsPeFdLlymHptB
The heart of this video is copy-firmware.sh
And yes initrd.gz not has to be edited, it recognized the overlayfs only kernel and booted up well.
Thanks again, best wishes!