Migration issue from NCS v2.6.1 to v3.1.1 — Sysbuild migration, Network core image not building & dynamic partition failure

Question

Hi Team, 
 We are working on a commercial pre-production project using nRF5340 and are currently migrating from nRF Connect SDK 2.6.1 to NCS 3.1.1 . We followed the official Sysbuild migration guide: Migration guide: Migration to sysbuild ( https://docs.nordicsemi.com/bundle/ncs-latest/page/nrf/releases_and_maturity/migration/migration_sysbuild.html ) 
 During migration we observed two issues regarding Sysbuild and dynamic partition management. 
 
 Environment

Item 
 Version / Details

Hardware 
 nRF5340 (custom board or DK — specify)

SDK 
 nRF Connect SDK v3.1.1 (previously 2.6.1)

Toolchain 
 (ex: v2.5.0)

Build system 
 VSCode + West

Application type 
 Dual-core (App core + Net core), IPC/HCI based

Issue Details 
 Issue 1 — Network core image not building 
 Following the migration guide, we initially created:

sysbuild.conf with:

SB_CONFIG_NETCORE_HCI_IPC =y
 SB_CONFIG_PARTITION_MANAGER =y

sysbuild.cmake file

However, the network core image was not getting built , and build failed with errors. 
 Issue 2 — Dynamic partition is not working 
 To resolve the first issue, we removed sysbuild.conf and instead added kconfig.sysbuild . After this change: 
 Network core image is now building correctly Dynamic partition still fails , showing the same partition-manager related build error. 
 787:45: error: 'user_storage' undeclared (first use in this function)
 787 | err = flash_area_open(FLASH_AREA_ID(user_storage), &fa);
 | ^~~~~~~~~~~~
815:45: error: 'bad_block_table' undeclared (first use in this function); did you mean 'bad_blk_table'?
 815 | err = flash_area_open(FLASH_AREA_ID(bad_block_table), &fa);
 | ^~~~~~~~~~~~~~~
 | bad_blk_table
841:45: error: 'settings_storage' undeclared (first use in this function)
 841 | err = flash_area_open(FLASH_AREA_ID(settings_storage), &fa); 
 We expect partitions to be dynamically generated when using sysbuild, but it appears partition manager is not active or parameters are not being picked up. 
 
 What we need help with

Correct configuration for enabling dynamic partitioning under Sysbuild in NCS 3.1.1

Recommended usage of:

sysbuild.conf vs kconfig.sysbuild

sysbuild.cmake placement & syntax

Any example reference for nRF5340 dual-core + IPC + Sysbuild + Partition Manager

Clarification if SB_CONFIG_PARTITION_MANAGER is sufficient or additional settings are required

Additional Notes 
 This migration is time-critical since we are in the final pre-production stage and planning to freeze FW for manufacturing. Any support or guidance would be very helpful. 
 pm.yml is bellow 
 
 app:
 address: 0x00000000
 size: 0xE8000 # 928 KB

memfault_storage:
 address: 0x000E8000
 size: 0x10000 # 64 KB
 placement:
 region: flash_primary
 after: [app]

bad_block_table:
 address: 0x00F8000
 size: 0x2000 # 8 KB
 placement:
 region: flash_primary
 after: [memfault_storage]
 
settings_storage:
 address: 0x000FA000
 size: 0x2000 # 8 KB
 placement:
 region: flash_primary
 after: [bad_block_table]

user_storage:
 address: 0x000FC000
 size: 0x4000 # 16 KB
 placement:
 region: flash_primary
 before: [end]