We are using GSuite integration and the user is an external user that does not have access to our GSuite.
I've tried manually adding them and creating a group (in atlassian group admin), adding them to that group but I can't then see that group in confluence at all in order to configure it for restricted space access.
You should be able to add a group and add that user to the group...then add that group not only to the Space permissions for the space they need access to, but also to Globla Permissions with the permission "Can Use". Without that permission they will have access to the Space, but no ability to login to Confluence to see the space.
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