Hi @Mike Mancour ,
TestN is not in Exchange on-prem or in Exchange 365 which may be the issue, but I am not sure how to add an unlicensed user to Exchange in either enviornment.
Sorry that I don't have a hybrid environment to test the exactly same scenario as yours. But based on my test in a pure Exchange Online lab tenant, seems like an AAD user with no mailbox or any license can successfully show up in the Organization chart:
I created a new user "test0828" yesterday from Microsoft 365 admin center, set the manager properties as "admin01" and didn't assign any license to it.
Today (almost 24 hours has passed since I created the user) when I check admin01's Organization chart from an email in Outlook, test0828 is listed there:
Given this, if it's acceptable for you to create these users in the cloud side, probably you can give this a shot by creating a test user from the admin center without assigning licenses, then add the manager field by selecting the user and go to the details flyout. Wait for a few hours and check if it can show up in the organization chart.
By the way, considering that it's a public community, I just edited the images you shared by obfuscating sensitive data like phone number, domain name, etc. for privacy concern.