Initially I was getting same issue. but, after adding the storage connection string in function app environment variables working as expected.
- while adding the connection string in environment variable name and value must be same in portal and local.
- After adding the connection string need to redeploy the function.

I have created blob trigger function with run time stack .NET 8.0.
The function got triggered when i uploaded blobs in container.
Function code:
public class Function1
{
private readonly ILogger<Function1> _logger;
public Function1(ILogger<Function1> logger)
{
_logger = logger;
}
[Function(nameof(Function1))]
public async Task Run([BlobTrigger("hello32/{name}", Connection = "Connection23")] Stream stream, string name)
{
using var blobStreamReader = new StreamReader(stream);
var content = await blobStreamReader.ReadToEndAsync();
_logger.LogInformation($"C# Blob trigger function Processed blob\n Name: {name} \n Data: {content}");
}
}
local.settings.json:
{
"IsEncrypted": false,
"Values": {
"AzureWebJobsStorage": "UseDevelopmentStorage=true",
"FUNCTIONS_WORKER_RUNTIME": "dotnet-isolated",
"Connection23": "your-storage conn-string"
}
}

I have published the function into azure portal successfully. check below:

When I uploaded the blobs in container the function got triggered in portal as well. check the below traces:

Below are uploaded blobs in storage container.
