Had the same issue. All settings appeared to be correct. However, my account also manages my nephew's Microsoft account.
I went into his settings and his account was set to block chatting outside of Xbox live. Set his account to allow, and my account started working for chatting.
This definitely seems like a programming bug. My account should not be pulling the settings from his account, which is a completely different login.
emerysteele
Had the same issue. All settings appeared to be correct. However, my account also manages my nephew's Microsoft account.
I went into his settings and his account was set to block chatting outside of Xbox live. Set his account to allow, and my account started working for chatting.
This definitely seems like a programming bug. My account should not be pulling the settings from his account, which is a completely different login.