Comment 20 for bug 1874567

Thank you for fixing this bug. Installing mutter 3.36.4-0ubuntu0.20.04.1 and libmutter 3.36.4-0ubuntu0.20.04.1 from focal-proposed has resolved this issue for me.

Note: The updated libmutter from focal-proposed also had to be explicitly installed by me, as it was not automatically pulled in when updating mutter.

Steps:
1) Enabled focal-proposed
2) apt update
3) apt install mutter libmutter
4) Disabled focal-proposed
5) Removed ~/.config/monitors.xml and ~gdm/config/monitors.xml
6) Rebooted
7) After login, I successfully applied my desired monitor configuration (changing the primary monitor and setting other monitor to portrait orientation).

Side notes:
1) I still had to copy ~/.config/monitors.xml to ~gdm/.config/monitors.xml for the correct primary monitor and orientation to be set on the login screen.
2) After applying the display configuration, the icons in the top-right of the gnome panel appeared blured (network/bluetooth). This was resolved by applying 150% fractional scaling and then applying 100% scaling again in the gnome display settings. I haven't had time to reproduce this to know if it's a one-off or ongoing bug.