To patch any version of Sitecore Identity server, you should make use of the sitecoreruntime folder.
Within that folder, create a subfolder with the name of the environment you are working on (i.e. UAT). Then create an an environment variable called SITECORE_Environment and give it the same value (i.e. UAT).
Within that sub folder, you can then place an exact copy of sitecorehost.xml
and override any settings specific to your chosen environment.
A typical distribution may then be deployed with multiple sub folders within the sitecoreruntime folder. The system will check the value stored within Sitecore_Environment variable and patch over the environment specific settings from within the relevant folder.
i.e.
C:\inetpub\wwwroot\your-identity-server\sitecoreruntime\UAT\sitecorehost.xml
UPDATE
If you look at the examples provided in the first link below, they use one less SITECORE in their environment variable then you have in the question.
I just tested setting the environment variables below to "Debug" and can see they have successfully patched the settings:
- SITECORE_Logging__Serilog__MinimumLevel__Default
- SITECORE_Logging:Serilog:MinimumLevel:Default
Therefore, please try again but use either of these in your situation:
- SITECORE_Logging__ApplicationInsights__InstrumentationKey
- SITECORE_Logging:ApplicationInsights:InstrumentationKey
Further information here:
https://doc.sitecore.com/xp/en/developers/103/sitecore-experience-manager/configuration.html
https://doc.sitecore.com/xp/en/developers/103/sitecore-experience-manager/runtime-configuration.html