1. The base D2 game is free to play from the XBL store.
2. Game share is a console feature not Bungie one. Any issues you need to contact XBL support.
3. That message normally pops up if you are trying to use the same account on different consoles at the same time which XBL does not allow.
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He has his own xbox account. What he does not have though, is his own copy of Destiny 2 or any of the expansions, nor xbox live. What I'm trying to determine is whether I can purchase a separate copy of Witch Queen (and/or other expansions) and that would resolve the issue, or does he need a separate xbox live account, or are both needed? I know Bungie is separate from Microsoft (Sony now, actually) and apparently other games can be online and cooperative at the same time if the console settings are set up a certain way (home xbox, specifically).
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He needs his own XB account with XBL gold. From what you said sounds like you are both trying to play on the same account at the same time. Game share is a platform feature not a game one so any problems is for Microsoft support not Bungie. As I said the base game is free. Dlc can be game shared. Bungie being part of Sony has nothing to do with this.