I did a lot of narrowing down to isolate this but I believe that if you've played Grounded 2 on Game Pass, you're permanently locked out of doing any multiplayer on Steam. I have played a lot of Grounded 2 with a friend on PC through Game Pass and saw that it was available on Steam for $30, so I bought it and went to transfer my save. But I cannot even access the multiplayer menu; the name at the top left of the menu screen reflects that my xbox account is signed in and linked (it shows my xbox name, not my steam name). I get a screen saying I have to sign into xbox, then a load screen, then it goes back to the main menu. If I disable crossplay, I get the same screen; if I enable crossplay after that, the game gets stuck in an infinite load screen.

 

I created a new xbox account and had that logged in when I started Grounded 2 on steam. The menu screen reflects that I am logged into this new xbox account (that's never played grounded 2) and lets me proceed to the multiplayer menu.

 

So I think I have narrowed it down to some kind of authentication issue, maybe on Xbox's end; I think Grounded 2 on Steam tries to log into Xbox, but because I'm already logged in on Xbox, it bugs out and takes me back to the menu screen.

Actually I fixed this two minutes after posting.

 

On the Xbox version, I hit the button to change profile; this takes you to a screen saying "press any button," and if you do, it'll ask you to sign in with your xbox account.

Just alt f4 from that screen. Don't press any button. Just alt f4. This leaves Grounded on xbox in a logged out state.

Then you can open Grounded on Steam and it logs you in correctly.

Not working for me. I sign out of the Xbox app on my computer (Grounded 2 previously installed, now uninstalled) and I get the same failure to bring up multiplayer.