False value you see in Model Update Wizard for the Not Null attribute is correct, because when you look into the constraints definition from Toad, you cannot see Not Null constraint there. Therefore False value.
PK enforces behavior of attribute as not Nullable, but if the keyword NOT NULL is not stated for the attribute, the NOT NULL constraint does not get created. Toad Data Model takes this into account.
Behavior of TDM concerning that NotNull is based on the fact that, in Oracle, there is a difference whether the tables is created by a statement with the attribute having NOT NULL constraint (In the database the NOT NULL constraint is created then.):
CREATE TABLE tabname (atr INTEGER NOT NULL PRIMARY KEY);
or the following way without the NOT NULL constraint stated (In the database the NOT NULL constraint is NOT created then.):
CREATE TABLE tabname (atr INTEGER PRIMARY KEY);
TDM considers the above difference during RE and in the first case the NOT NULL attribute is set, in the other it isn’t. It means that when generating the reverse-engineered database, the table gets created the same way as it was created originally.
If you want a chance to not set NOT NULL constraint on attribute then you go to Options (menu Settings > Options) and in tree "Model > Physical Model" check checkbox "Allow Null Attributes in Keys".