The experience you describe there is 100% how it's meant to work.
The point of this option is that you were npc_safe until you picked up something to fight with, and Rust gave you a sash.
To be honest, if you use NoSash the workings of the option don't really matter.
It relies on Rust sash system so, as per console output, is disabled for your server.
"Can you in any way make the option based on whether the player has a backpack instead of NoSash ?, because that plugin is configurable so that any noob player will not get one for a set amount of time , for instance new players do not get a backpack on my server until they have one hour on the server"
Not sure about connecting it up with backpacks or other plugins - Seems a bit too server-specific, maybe, but I could have an additional option with a time-frame or trigger.
Wouldn't be too hard to have an automatically granted permission for new players which makes them safe, then a few options for server owners to revoke that permission,
like when the player first fires a weapon, or first places a TC, or after a set time period...
That could be done.