nasal congestion upon waking

Why sometimes their is nasal congestion with heated humidifier setting at 2-3

From what I've read here, higher humidity settings can actually exacerbate nasal congestion. Try turning it down a bit and see if that helps.

On the other hand you may want to increase it! I found my nasal congestion on waking has dramatically decreased and while I had a cold I increased the setting to 9 and it really helped me.
But everyone is different.

I find that when I wake, I am clear, but quickly have a spell of congestion, that subsides soon. This happens every morning. I think it is my sinuses adjusting to the sudden lack of humidity, or breathing unfiltered air. I find it tolerable.

I am inclined to suggest reducing the humidity level. But more importantly replace (wash if washable) your filters especially if you have nasal allergy. If you think your hose has been sitting around during the day time moist, you may want to clean it in diluted vinegar too.

Moral of the posts ... play around with the humidity until you find out what setting works best for YOU cuz everyone is different. And even if we were not all different, we all live in areas with a different climate that requires different HH settings.