"Offline Game Difficulty Scale setting" does not persist between games

This can easily be tested by starting a new character, changing the slider to 8 and then killing a zombie in the Blood Moor, it will take many hits to kill it and you will receive 148 experience.

Then start a new game with the same character and go kill another zombie without changing the settings. It will die very quickly and only give 33 experience, equivalent to having the slider on 1.