I appreciate the updates that you gave regarding the steps that you've tried, @ED777.

I want to make sure that you'll be able to get past the error that you receive when trying to add a credit note to the invoice in QBO.

To help verify the reason behind this behavior, I recommend reaching out to our Customer Care Team. They have the necessary tools that can investigate the root cause of this matter and apply a fix.

To do that:

1. Click on Help at the top menu bar.
2. Hit on the Contact Us button.
3. Enter a brief description of the issue in the What can we help you with? box.
4. Press on Let's talk.
5. Select on Get a callback.
6. Key in your contact details, then tap on Confirm my call.

On the other hand, to get your work done, I'd suggest applying the credit note from the receive payment section.

Here's how:

1. Click on Sales from the left pane.
2. Refer to the Invoices tab.
3. Look for the invoice and hit on Receive Payment.
4. Select the Credit note to be applied. 
5. Hit on Save and Close.

For more insights about managing credit notes in the system, you can always utilize this link: Create and apply credit notes or delayed credits in QuickBooks Online.

Please let me know if you have questions with this or with QBO. I’ll be here to help. Wishing you the best!