I can think of two possibilities.
1) You did not state that the "Update change history for an issue and store the issue in the database" is part of your post-function chain. Without this post action, the database will not be updated with your change.
2) if you do have that post-function does it occur before the assignee post action?
I do not believe it is a permission problem since you can do the action manually.
Thanks Norman.. I changed it to the following and it seems to have fixed it.
Since this is an initial transition, I am not sure if you also need this post function or not.
"Set issue status to the linked status of the destination workflow step" I know you need it for any other transition. See this documentation:
You need to make the "assign" step the first in the list of post functions, as explained in this knowledge base article.
5. Add a post-function, 'Update Issue Field', and set the Assignee field to desired user (if necessary, create a draft so the workflow is editable)
6. Make sure the Post-function is the first step in the list
It seems counter-intuitive to set the assignee before the issue is created, but it seems to do the trick.
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