Rua knows that <oe> is /u/. It's that (Middle) Dutch /u/ comes from PGem *ō, not PGem *u.
Indeed, the descendant of this verb in Middle Dutch, if one had existed, would be *genōgen, whereas genoegen is a derivative of *ganōgaz. Note the difference in the vowels: ō > oe, u > ō.
