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The users with the project role: project member have "Assignable User" and "Assign Issues" permissions.
No, they did not have the "Edit Issue" permission as that was not intended for those processing the issues.
The permission scheme in use was built over two years ago.
As of 10 May 2023 they cannot assign issues. Added the project member role to the "Edit Issues" permission and now it works.
Added the "Edit Issues" based on discussions I found here:
What changed and why?
Several other users have reported the same problem in the posts linked before. Each has been encouraged to contact Atlassian Support directly. I recommend the same to you, and if you could report back to us here what you learn that would be wonderful.
https://support.atlassian.com/contact/#/
I have not yet found anything about this is the weekly release notes.
I did confirm with another Community Leader that they do not see this change on their environment, but they have Release Tracks enabled so they are not getting all cloud updates immediately.
https://community.atlassian.com/t5/Jira-questions/Problem-assigning-tickets/qaq-p/2355937
Per feedback on this post it sounds like the problem has been resolved by Atlassian Support.
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