I don;t think people awaiting approval would have an effect.

That error message definitely suggestes something permission related.

I take it the people singing up have that permission in their profile?

Here's someone from last year having the same issue as you

https://totara.community/mod/forum/discuss.php?d=22110#p89386

There's no reply but you could check with them and see if they ever got to the bottom of it.