Based on the ffmpeg command in your log, it doesn't appear that you checked both of the Low Power encoding settings. Low power encoding is required for Arc GPUs. Check both of those boxes and try again.
Jellyfin 10.10.3 (Docker)
Ubuntu 24.04 LTS
Intel i3 12100
Intel Arc A380
OS drive - SK Hynix P41 1TB
Storage
3x WD Red Pro 6TB CMR in RAIDZ1 (JF Library)