So you can pass in that system property multiple ways. I would recommend passing it in the JVM startup args for however you run Jenkins, or at the script console found in the manage jenkins setting. The JVM startup is where I would recommend you do it. Once that is done, I can't say to where your logs would be, because that would depend on your system and how you installed Jenkins.
As for 1.33, i'm not sure why it wouldn't appear in the update center. I know you mentioned that you have issues in 1.30, but if you don't see 1.33, i would recommend downgrading to 1.30. in the plugin manager UI.
Could you open a mailing list thread on the jenkinsci-users mailing list for this question? You should add the output once you enable LAUNCH_DIAGNOSTICS, and some details about whether this was working for you previously (i.e. what version of Jenkins you are running, what OS you are using on the Jenkins master and the agent being used by the shell step, etc.). The bug tracker is not the right place for general investigation of issues like this. I am going to close this issue for now, if it looks like there is a bug after you provide more info on the mailing list, we’ll reopen the ticket