Item settings are always chosen randomly. Leaving items on while setting the frequency to none will still allow some characters to spawn them that aren't able to when they're all off. If someone shuts off all items, but leaves the frequency on, while his opponent has some on, but set to none. It can mix and match the two and let items spawn.
King Dedede is the prime example of this.
My Creations in Modnation Racers! Check zhem!
http://community.modnation.com/en-us/players/IvoYaridovich/creations