I SOLVED IT!
When I installed Moonlight Streaming client something must have changed the way Kodi uses the graphics subsystem. I went into dietpi-config and checked under “display options”. There I saw that “18 : RPi Codecs : [On] V4L2 hardware video codecs” was ON. I tried to switch it off and reboot and VOILÁ, it all worked.
The pipewire error message is still there however but it does not affect anything it seems.