Embedded files in PDF display differently with different versions of Illustrator, linked & embedded

My colleague and I each opened the same PDF in Illustrator to try to export smaller versions. Neither of us made the original PDF. When he opened the the file, he was warned that linked files were missing. They appeared pixelated and exported the same way. When I opened the document, I was given no warning about missing linked files, only that the version of AI I was using was older than what created this file. I opened anyway, the image previews looked great, the export looked great. All files in the Links looked embedded. 

To test it, I updated to 2025, 29.1. I don't know what version I was on before. it was 2024 something, so nothing too far behind. After the update, I got the warning about missing linked files with pixelated previews.

Why would an older version see the linked files differently, as if they were embedded and not linked, and be able to handle the file and export no problem?

The other strange part is that after hitting up the original creator, he told us that the original PDF was so large because the files were all embedded and he created a new unembedded file. So is the real question: why does 29.1 see them as linked and missing? Is there a default setting in 29.1 causing this?