This is a desired behavior since Flash SMS has been abused to send marketing messages. Moreover, some telcos themselves are abusing these Flash SMS and use this method to send their own marketing messages.

This remains true as per Xcode 15.1 The folder "~/Library/Developer" needs to be a real folder, not a symlink to somewhere else.

You could have another copy of your app (and thus, extension) installed that is not built for debugging. The Photos app could have loaded that one instead of the one made by Xcode. In this case, you could temporarily move all other copies of your app to the Trash and re-launch Photos in Xcode to debug your app extension.