The original issue manifested on Flarum forum installed on FreeFlarum (used to evaluate product for organization's requirements). We have subsequently installed Flarum on the organization's hosting site.
In the FreeFlarum installation, disabled extensions (all) in order to test. In this particular organization's use case / requirements, users may only create discussions within specific 'tag' (accomplished via 'restrict by tag') and are unable to Globally 'Start Discussions'. When configured in this manner, the users are unable to Start Private Discussions despite the permissions being set to allow for Create private discussions with users and Add more than 2 user recipients to private discussion. As a step in trouble-shooting I enabled the Global Permission to Start discussions for those users and they were then able to Start Private Discussions.
In the newly installed Flarum forum, on the organization's hosting site, this exact same behaviour is observed. Same conditions, when users are configured to only Start Discussions is specific tags they are unable to Start Private Discussions (even if Create private discussions with users and Add more than 2 user recipients to private discussion. is enabled for them). If I enable the users with the Start Discussions (Global) they are able to Create Private Discussions
Unfortunately, the organization's requirements are such that users may only Start Discussions within specific tags.
Deanna