Hey there, the issue sounds like it is because both accounts have a Bungie Account. The error message is slightly misleading.
As of March 2025, it is no longer possible to unlink a platform account from its Bungie Account.
That means that while your XBox account and Steam account do not have another platform account linked to them, you're unable to link them together because it'd require one to be detached from its current Bungie Account - which can no longer happen.
OH...ok that actually makes some sense. That's an unfortunate problem. Before I do anything do you have any idea if I delete one of the bungie accounts (eg. the newer steam account) from Bungie would it fix the problem? Or am I in uncharted territory here? Or...am I boned?
It's not a huge deal, I just had some things I had earned on the xbox account that I'd love to transfer over but really, it's all only cosmetic.
Appreciate your input. Super helpful.