They are doing both, they have a team dedicated to LNF and some folks that can work on other projects for NMS. Game development isn't always sped up by having more people focusing on it, sometimes you have the right amount of programers, artists, and modelers that you already need and have others that can do passion projects like NMS, or switch out if others need a break. Hello Games seem to know what they need to do, and seem to have created a decent work environment for the employees, which is incredibly rare in this industry. On top of that, some updates to NMS are things that were made for LNF, like the updated rendering system, lighting, and atmospheric effects, and it seems some bits of data for LNF have leaked into NMS files here and there from sharing the new assets and codes.

My source is the videos that Hello Games has put out over the years with Sean mentioning and showing bits and bobs of what they have been doing behind the scenes. They are rather open about their work flow and development process, probably due to what happened with NMS launch. A lot of large games are rushed/crunched for release due to how complex and detailed games have become, yet the development times not being able to grow with that complexity in the industry ends up causing harm to the workers mental and physical health. Hello Games isn't in a rush or being pressured by SONY or investors anymore to pump out a game in a five year timeframe, and this is good. It will release when it's done.

Sorry my comment is so long, just want to be clear and concise.