The validity checking of variable user_picture_path takes place inside the form generation function user_admin_settings(), not in a validation hook. As a result, the validity of user_picture_path is not checked at form submission. Further, once user_picture_path is set to something invalid, it's not possible to correct it to something valid (since the form always fails to validate on submission).
Repeat by:
- On /admin/config/people/accounts, set the User Picture directory to something invalid, such as 'public://pictures'
- Submit the form
- Receive a validation error: The directory public://public://pictures does not exist or is not writable.
- Correct the User Picture directory value to something valid, such as 'pictures'
- Submit the form
- Continue to receive a validation error