By the way, the actual build error is ld: Undefined symbols:.
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My "accepted" answer was actually a false positive as this still leads to linker errors when trying to build the test target.
I was able to solve this transitive dependency resolution issue by adding the testing utilities product target via the test target's "Target Dependencies" section within "Build Phases", instead of through "Link Binary With Libraries"
I forgot to include in the post, but we found a hack that works but it is pretty annoying. If we duplicate all of "Library"'s dependencies in "LibaryTestUtilities" we can get it to work, though it requires building the host application's target otherwise we will get the error No such module Library when building LibraryTestUtilities. Obviously this is not ideal so we would like to find a solution that allows us to use the testing utilities package without needing to add them to the main app. Ideally, they should only be linked in the test target.
I've also noticed that using DispatchQueue to introduce a tiny delay (0.01 seconds) when toggling the binding variable controlling sheet presentation (in the sample case sheetOpen) seems to prevent the dual presentation error
It's also worth noting that I have not been able to reproduce this issue on SwiftUI Previews, for what it's worth
I believe I am having the same issue with a user in 13.7 but I can't reproduce it. Our crash log is almost identical. Does anyone know if this issue has been resolved in newer releases?