Right, when you create a condensing change, if all you do is activate the checkbox for a particular condensing group, what you’re doing is telling Dorico “a new phrase starts here”. Although it’s not the only thing Dorico considers (as mentioned above, if you are already midway through a system, if the staff setup has already been determined, simply starting a new phrase can’t change that), the start of a new phrase allows Dorico to reconsider its condensing decisions.
You don’t need to explicitly switch on the “manual condensing” slide switch and activate Reset in your condensing change: simply activating the checkbox for the condensing group you want Dorico to reconsider is sufficient.
The up-stem voice in the picture you show is a continuous phrase, because phrases only start automatically at rests; as such, if you want Dorico to be able to treat a solo passage differently but it is not preceded by a rest, you’d need a condensing change at that point.