sounds wrong. At least for the tl-wr1043 that is an old-style ar71xx/generic router.
For most routers, the only difference between sysupgrade and factory image is just the necessary header & packaging, so that the OEM firmware's flashing routine will accept the Openwrt/LEDE image. For most routers, you can't flash a sysupgrade image using the OEM firmware.
Login to SSH console/terminal and see the output of "df -h". The overlayfs should be mounted as "/".
tmpfs 14472 68 14404 0% /tmp
/dev/mtdblock3 1909456 11536 1799260 1% /overlay
overlayfs:/overlay 1088 984 104 90% /
Like @slh already explained, if there is not enough free space on the /overlay partition, it may not get mounted, or may get mounted read-only. Then you may have tmpfs mounted for "/", and all settings go just to ramdisk.