I've been stuck on this for two days now. Specifically, I have two Mac (non-Catalyst) targets bundled with my Mac Catalyst app and these fail on submission with the same error everyone else is seeing.
First, I tried generating manual provisioning profiles with the application-group entitlement added. Archive works but submitting to ASC fails with the same error as before.
Second, I installed the Xcode 16.3 beta, toggled "Automatically manage signing" off and on, and then deleted and re-added the App Group capability. This finally updated my Xcode Managed Profiles to include the application-group entitlement. However, submitting to ASC still fails (I tried archiving and submitting with both Xcode 16.3 and 16.2).
I'm not sure what else to try at this point.