Why cant it just be that when we target a monster and hit enter OR double left click to engage auto attack (despite what state we are in).

The action is specific enough that you won't be engaging in combat by accident (you must target the monster and hit enter) and it continues to make use of the fact that the Enter key is our 'Interact Button'.

I figure it like this:
You are in passive. You target a monster and hit enter. Your character draws their weapon and goes into auto attack mode (if you are in range you'd start hitting it, if you are not facing it or are to far away you would need to reposition)
If you are in active mode it would continue to do exactly what it does now (you attack automatically as long as the conditions are met)

Its the first half of the above we are still missing. Add in the feature where it faces you towards your target when you hit enter or double left click and we're golden.

Now, as far as not wanting to add unnecessary buttons for combat... I'm sure adding a keybind with the sole purpose of rotating your character to face the monster was leagues and leagues easier to justify than a button that initiates auto attack without 3-4 key additional presses at worst.