Is there a reason why the first does switches off the rule above the footnote
  \setupfootnotes[rule=off]
but this doesn't?
  \setupnotation[footnote][rule=off]]

Just try with

\setupnotation[footnote][rule=off] % either this or the next one
%\setupfootnotes[rule=off]
\starttext
Some footnote\footnote{The foonote}.\crlf
\stoptext

Hans van der Meer



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