Unable to add O365 API access to Okta

Hello,
We have a Google federated account setup in our current Entra tenant and we are trying to get Okta SSO setup for testing.

It looks like currently our existing admin account is setup under a sub-tenant and any new federated Google account that we create is going under that same sub tenant despite the user page showing as being in the correct place.

This results in a "Error AADSTS50020 - User account from identity provider does not exist in tenant" issue when trying to give Okta O365 API Access.

We are trying to avoid having to setup another Developer account just for this and would prefer to test this way with just a select few users, however unable to get around this issue currently.

Any advice is appreciated.