Issue #3263496 by mupsi: Fix error adding element to library from default layout form by supporting Display and Entity contexts for default and overridden layouts

Checkpoints

• File an issue
• Fix bugs in code
• Merge request
• Testing to ensure no regression
• Automated unit testing coverage
• Automated functional testing coverage
• UX/UI designer responsibilities
• Readability
• Accessibility
• Performance
• Security
• Documentation
• Code review by maintainers
• Full testing and approval
• Credit contributors
• Review with the product owner