Simple location’s privacy setting seems to override the post’s public/private settings on my site as well. Perhaps it’s a naming conflict (function/filter/etc.) with WP’s core content visibility code?
In any case, I can’t make a post private while Simple Location is installed/activated either. This seems to happen regardless of other plugins. I do seem to be able to use @vishae’s method of using the quick edit option to change a post to private. I’m not sure if this may indicate a potential solution to the issue based on what is firing on a post save/update versus what fires on a quick edit save.
Additionally, I don’t seem to be able to mark a particular location as “private” in a post either as upon saving it it defaults back to public in the UI. I only seem to be able to use “public” or “protected” options for locations.