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After hours of AI answers lying and telling me it was impossible for 2 accounts to play at the same time, and trying all there suggestions again, I was transferred to a human and helped. This is what got my accounts fixed last night.
If You have Xbox Game Pass, Home Xbox is correctly set, Multiplayer works for the owner account but not for the family account on the same Home Xbox, You’ve already tried power cycling, clearing MAC, resetting Home Xbox, and refreshing the subscription.
90% There.
you’ll need to set up a Microsoft Family group first if you want to share your Xbox Game Pass Ultimate subscription benefits (including multiplayer) with other accounts on your Home Xbox. The Home Xbox feature shares games and subscriptions locally, but multiplayer access for non‑owner accounts is tied to family permissions.
Please follow this steps.
Create a family group Go to family.microsoft.com and sign in with your organizer account (the subscription owner).
Select Create a family group. Add family members Invite your family members by entering their Microsoft email addresses. They’ll receive an invite to join your group.
Manage permissions Once added, go to Family settings → select the member → adjust privacy and online safety. Set “You can join multiplayer games” to Allow.
Confirm Home Xbox setup On your console, sign in with the owner account → Settings → General → Personalization → My home Xbox → Set this as my home Xbox.
Test multiplayer Sign in with the family account, launch a Game Pass title, and try joining an online session.
Hope it helps!