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At the time when Germanic cultures were creating many such names, parents were putting together two syllables which had come to be seen as appropriate name elements and did not necessarily think of themselves as creating a joint "meaning" for the name. There are many examples where syllables were taken from names of parents or grandparents and put together in a way that shows the parents were just trying to link the children to the family line, not thinking about what "meaning" the two syllables together might convey. One example of that often given is of the English bishop Wulfstan who lived in the 11th century. His father was named Aethelstan and his mother Wulfgifu, and a biography of him written shortly after his death says they just combined syllables from their own names to create his, not to convey a meaning of "wolf's stone".

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So you really can't know what the very first parents who put "Liut" and "bald" together were thinking. They might have intended one of the two meanings you ask about, or they might simply have been putting together two syllables traditional in names that they thought sounded good together or that honored relatives.

This message was edited 8/22/2022, 10:11 AM