Hi Jerry,
Thanks for your detailed description. I've run a test on my side, but can't reproduce the issue. In this situation, I'd like to collect the following information:
1. When the error prompts, if you click "ok", re-open the group and check to see if the new added user can be seen in the sender list.
2. Please run a test on a new group and check to see if the issue persists.
3. Sign out and sign into Office 365 and check to see if it works.
4. Sign into Office 365 with the admin account. In the "Admin" page, click "service health" and check to see whether the status of the Exchange online services are fine.
Thanks,
Aaron Yuan