Hi AnteK1,
Thanks for your post with above detailed information.
From your description, if you want to allow person x is sending on behalf person y, we recommend you may restore all current settings and the try to edit and assign the send on behalf permission via the following steps and check if it helps:
- Sign into Microsoft 365 admin center, negative to Users >Active users page.
- Click on person y from the active users list, click Mail tab, under Mailbox permissions, click Send on behalf of permissions:
- Under Add send on behalf of permissions, enter person person x's email address and click Save changes:
Wait for a few hours for the changes to take effect, then try to send a test email from Outlook web APP to check the result.
For your reference: Send email from a different address in Outlook on the web
Best regards,
Jennifer