With the setting you are showing and the "1" meaning out of range for that particular scale, I'd say the diode is good and has 0.605v drop in the forward direction.
The test current for the diode test may be 1 mA; it'll be in the specs for your meter.
My meter reads "OL" for "overload" when I'm out of range.
I'd look for something in the switch that is loose or worn, an adjustment of some kind, that prevents a good bulb from lighting.
You may need a schematic for your vehicle's circuitry that interfaces with this trunk circuit; this diode may be there for current steering and so the problem may be elsewhere.