We can't find the 'Use Lead Nurturing Agent' Permission Set assigned to the correct user.

"The Agentforce Lead Nurturing name has changed to Agentforce Engagement. The new name better describes the work the agent does to nurture existing prospects and differentiates it from the Agentforce Lead Generation agent template." 

So Dinesh, that's exactly why you can't find "Lead Nurturing" anywhere, it's been renamed. Here's what to look for instead: 

1. In Setup, the agent template now appears as Agentforce Engagement, not Lead Nurturing. 

2. The permission set is now Use Engagement Agent (contains the "Use Engagement Agent App" permission), this replaces what the module instructions still call "Use Lead Nurturing Agent." 

3. Assignment path: 

   Setup > search Agentforce Engagement > under Manage Access for Managers and Users > click Manage > assign Use Engagement Agent to the correct user. 

4. If you're setting this up as an admin/manager rather than just a user, you'd instead need Configure Engagement Agent (which includes Manage AI Agents, needed for Agentforce Builder access). 

Official reference:

Since the TDX26AgentblazerChallenge module instructions were written before this rename, this is very likely the actual blocker, you were searching for exact text ("Lead Nurturing") that no longer exists in the UI. Try the Engagement Agent path above and see if that resolves both issues at once.