Precisely and exactly! That's the whole of the problem - optimising for one thing (appearance) results in the loss of other things we value.

This just isn't always so. If you instruct an AI to optimise a car for speed, efficiency and durability but forget to specify that it has to be aerodynamic, you aren't going to get a car shaped like a brick. You can't optimise for speed and efficiency without optimising for aerodynamics too. In the same way it seems highly unlikely to me that you could optimise a society for freedom, education, just distribution of wealth, sexual equality and so on without creating something pretty close to optimal in terms of unwanted pregnancies, crime and other important axes.

Even if it's possible to do this, it seems like something which would require extra work and resources to achieve. A magical genie AI might be able to make you a super-efficient brick-shaped car by using Sufficiently Advanced Technology indistinguishable from magic but even for that genie it would have to be more work than making an equally optimal car by the defined parameters that wasn't a silly shape. In the same way an effectively God-like hypothetical AI might be able to make a siren world that optimised for everything except crime and create a world perfect in every way except that it was rife with crime but it seems like it would be more work, not less.

Next challenge: define liberty in code. This seems extraordinarily difficult.

I think if we can assume we have solved the strong AI problem, we can assume we have solved the much lesser problem of explaining liberty to an AI.

So we do agree that there are problem with an all-powerful genie?

We've got a problem with your assumptions about all-powerful genies, I think, because I think your argument relies on the genie being so ultimately all-powerful that it is exactly as easy for the genie to make an optimal brick-shaped car or an optimal car made out of tissue paper and post-it notes as it is for the genie to make an optimal proper car. I don't think that genie can exist in any remotely plausible universe.

If it's not all-powerful to that extreme then it's still going to be easier for the genie to make a society optimised (or close to it) across all the important axes at once than one optimised across all the ones we think to specify while tanking all the rest. So for any reasonable genie I still think market worlds don't make sense as a concept. Siren worlds, sure. Market worlds, not so much, because the things we value are deeply interconnected and you can't just arbitrarily dump-stat some while efficiently optimising all the rest.