Just a quick tip in case someone else runs into it or Salesforce folks want to investigate: We ran into a bug with the New Work page when accessed via the new Kanban Board or Work tab. If there are no active product tag assignment rules then the lookup fails to populate any options for product tag which makes it impossible to save a user story. Strangely enough, even making one rule active on a product tag seems to make all the active product tags for the team available to select.
Interestingly, this bug does not seem to affect the modal new work popup from the work manager or old kanban board new buttons.
Hint: if you don't want to set a product owner the validation rule can be disabled under setup allowing you to clear the field before saving
