<< The baro alt, with no exceptions that I know of, is set to QNH.>>
It is indeed a requirement that it is set to QNH when low flying en route, the exception being when you are imminently approaching a point at which you want to land or pass closely, then you may have the QFE set.
One of the settings was for the correct QNH but the other was appropriate for a QFE at the point in question.