I’m not sure what “woke roleplaying” is, but yes, the generic alignment system in AD&D is pretty much worthless as a roleplaying aid. That is because Dungeons & Dragons grew out of medieval miniature wargaming, and whatever background mythology and culture it had was artlessly tacked to the system. It’s character racial profiles were all essentially hacked wholesale out of Tolkien, and the bestiaries (the Monster Manuals and Fiend Folio) were largely drawn from pre-medieval Greek, Norse, and Celtic folklore along with some fantasy tropes that pervaded modules of the day and a healthy dose of rebranded Cthulhu Mythos.
How much this contributes to “boring, cliched, offering fewer opportunities for plot development,” depends on how the GM runs the game and how the players respond. Certainly, just populating a labyrinth or mine with random goblins and orcs for the characters to filet in a progressive murder-spree isn’t narratively interesting in and of itself (although the occasional dungeon crawl can be entertaining, particularly if it involves a lot of other challenges to survival) but “evil ugly monsters” is an enduring challenge in film, television, novels, plays, and roleplaying because it provides a face for the general fear of the unknown and uncontrollable.
Of course, if you are tying this to some specific racial prejudice with a patina of deniability that is not good, but nobody wants to seek adventure in a world where dragons breathe cotton candy and trolls are just misunderstood geniuses with bad skin. There are plenty of roleplaying settings that stem out of explicitly racist origins (specifically Call of Cthulhu based upon the work of H.P. Lovecraft, who was shockingly bigotted even by the standards of the day) but that doesn’t mean you need to play them that way; one of the best supplements for that game is Harlem Unbound by Chris Spivey, and I guess it is about as “woke” as it gets. And even in settings where bigotry and prejudice are part of the tapestry, that doesn’t mean the players and GM have to endorse it to play in it. It is entirely possible to play a bigoted character in a way that doesn’t not promote prejudice as a positive ideology (although it takes nuance and care to do so). The bigger problem in RPGs is the appropriation and misrepresentation of real world cultures in a way that is actually offensive.
Personally, I think Dungeons & Dragons (all editions, all settings) is a poor system for actual roleplaying, and isn’t even very good for the mechanics of combat and other in-wiorld actions. But then, I started out playing Runequest, which was from the beginning a system built around a pre-existing mythological world (Greg Stanfford’s Glorantha) which is independent of any specific real world cultural references, and actually has its own cosmology that isn’t a transparent riff on the Greek pantheon.