ARC application denial due to unrelated violation?

They are separate issues, so just because there's a dispute about the driveway doesn't mean the porch should or shouldn't be approved. Or vice versa. This is the argument people sometimes use when there's a dispute over unpaid assessments and then an exterior change request gets denied or a CCR violation notice issued - it usually doesn't work.

I suspect there isn't anything in state law about this because the board does have some leeway in how it runs the association's affairs and you aren't going to see legislation on each and every situation that may arise. Same thing for the Bylaws and CCRs - it's impossible to address every situation because the community will change over time and the homeowners may vote to add some things and drop others. Otherwise, the thing becomes so huge no one will read it. To be blunt, many of these issues come down to a matter of common sense and if everyone would stop and use some, they'd prevent a lot of drama.

Your denial should have some language about filing an appeal, so use it. In fact, file an appeal on the driveway and you can address both issues - you could do it at the same time, but I'd suggest separate hearings so everyone will stay focused. Prepare your arguments for each issue and see what happens. If nothing works on either issue, you might want to suggest alternative dispute resolution, where an independent arbitrator or negotiator can hear both sides and render a decision. It's faster and cheaper than court, but if you want to pursue legal action or get answers to legal questions, go to an attorney.

The authority the HOA has to approve or deny your application comes from the covenants. If the porch meets the requirements of the covenants they cannot deny it.

Even if the covenants gave them the authority to deny an application based on not being in good standing, it might be illegal. There may not be a statute about this but it's very possible there is a legal precedent. That would be a question for a lawyer.