Hi James
The assignment activity completion conditions only has the option for Student must receive a grade to complete this activity . A student who submits an assignment and receives a grade that is less than the pass grade shows as a x but still shows as 'completed' and 'did not achieve a pass grade'.
Activities such as the quiz have the activity completion conditions 'require passing grade' but unfortunately assignments don't.
A workaround to achieve what you want you could add a label with activity completion - 'Students can manually mark the activity as completed' and have this label with restrict access so it shows only when the Assignment has been completed with a pass grade. The label activity needs to be included in the course completion conditions so the course can only be completed when this activity has been completed. This requires the students to manually mark themselves complete.
Another possible workaround is to include a course grade in the course completion requirements and make it so the course grade can only be achieved by passing the Assignment activity. This may require adjusting weightings for activities in the gradebook . If there are lots of activities this may not work too well.
regards