I thought all the line privacy was on by default so I think this must have been changed to allow people to jump on calls. I buy from a distributor that installs all the daughter cards, upgrades the firmware, and loads a custom default config so I don't always remember NEC's defaults correctly though.
Yes, the line privacy on the SL1100 is absolutely horrid. One setting in 20-13 determines if privacy can be toggled and another determines if it is off or on by default. The line key blinking when privacy is off is enough to make the feature unusable. It seems designed to drive people mad.
If you ever need to allow people to jump in on other people's calls you really have to use the Barge feature (also needs to be enabled in 20-13) which targets the extension and not the line. Press Barge and enter the extension number. There is also a second setting in 20-13 (I think?) that determines whether the Barge starts as a monitor only or a conference. Barge also might require that the extension be entered on the keypad. I don't think it works with DSS keys. That might only be the case if automatic line selection is checked in 15-01-02 but I think it is the case all the time unless it was changed in the 5.0 firmware.