The Main Menu mute mutes all sounds, which includes nav instructions and alerts. The Sound menu navigation "None" just affects nav audio. It is working as expected and designed at this time.

Think of it like the sound on your computer: you have a sound volume and a sound mute. Mute doesn't change the volume setting, because when you unmute, it goes back to the previously selected volume level.

Trinary mute button will be available in the next version. Can't tell if it works properly yet due to not enough testing time. Here's how the button states look at the top of the main menu. Pretty clear IMO.