I understand that disabling invites is intended behaviour when local logins are disabled, but it seems to have the knock on effect of removing any way to add a new user to a PM:
Maybe, @techapj can you have a look?
Fixed via:
https://github.com/discourse/discourse/commit/9f8d6b6088912295421ebd04cf865677868a45ab
Also note that now user will also be able to invite existing users to a topic when local logins are disabled.
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