Something unexpected, which probably shouldn't happen, but not so strange.
It looks like when you burned the CD MC retained the existing tags from the files, probably storing them in
CD-Text format on the disc, including your custom tag "Media Sub Type Audio" tag, plus the original Sample Rate and Bit Depth. As you noted, it is reading the correct CDA file name, so it is reading the CD.
As MC saved those tags in CD-Text format on the CD, it is able to correctly read them back from the CD, and displays them for you, as per your screen shot.
The Audio Path correctly shows that the input file format is 16/44.1 The output format is actually 24/44.1, so that is what is displayed in the Audio Path, and in the display (top of screen).
As you have the output bit depth set to Automatic, it is probably your DAC that is telling MC to convert to 24bit. Hence the up-convert in the Audio Path. The only unexplained bit I can see is; why is the DAC selecting 24 Bit? Maybe for the files on the CD, MC is sending the tag information to the DAC, or its driver, so it selects that bit depth of the tag, which MC then up-converts to. Actually I think when Bit Depth is set to automatic, MC asks the Device (your DAC) "Can you play this Bit Depth?", and the DAC says yes or no. If MC is incorrectly using the tag information to ask that question, then your DAC may be saying yes to 24 Bit, so MC up-converts. Someone who knows more about the internal goings on of MC would have to answer that one.
You don't see 24 bit output when playing 16/44 CD rips from files in the library, because when CDs are ripped to the hard drive and imported into MC, the Sample Rate and Bit Depth are correctly set in tags, which the DAC then honours as the correct settings.
I think the real issue here is: Why are the Sample Rate and Bit Depth tags written to the CD at their original values, instead of at the converted values?
There are probably discussions of this issue on the forum somewhere...
PS: The incorrect Bit Depth may actually be coming from a header written into the files, rather than the tags. I leave someone else to clarify that.
PPS: BTW, does a commercial 16/44.1 CD get up-converted when played in MC in your system? On my system they get up-converted to 32 Bit, as do CD rips on the drive!