So I'm the original poster of this issue, and I haven't used TurboTax since the 2021 tax season, but I subsequently learned something that's most likely the root of the issue here:
New York does not consider payment of private K-12 tuition to be a qualified withdrawal from the NY 529 plan. Even though the Federal government does, NY state does not. As a result, you need to pay state tax on the pro-rated gains portion of any such withdrawal.
There still seems to be a glitch in the software in that it won't let you out of that loop, but it's correct when it says this is not a qualified NY 529 withdrawal.
