HW: M2 MacBook Air
moonm
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OS: Sequoia 15.1 (24B83)
After reading a comment where they came back a day later and it just worked, I tried rebooting and launching 16.1 it started downloading and now also works in beta.
Working Steps:
Install both release and beta Xcodes
Will see errors for both
Reboot
Launch Xcode 16.1
Started downloading successfully
Close Xcode 16.1
Launch Xcode 16.2beta2
Shows it is already installed