Yeah the usb, midi, usb+midi should be set to usb+midi and if it already is, try changing it to another option and then changing it back. Has this ever worked for you in the past? You can also (if trying to upgrade) use the sysex option instead of doing the transfer via usb, but the samples will have to be done through the transfer software app.
Another thing is in the past when I’ve had trouble getting transfer to connect to digitakt, if I power cycle the computer it usually connects right away on startup so that’s something you could also try. But usually, it’s before the stage where you’re at, it’s where you have to actually select the device you want to connect to, just endless cycling of trying to connect so I’m assuming your issue has to do more with the configuration.