My guess is manual starting worked by coincidence - kodi closes the audio device after 1 minute of inactivity, so if you started squeezelite after that it will succeed (but ofc then kodi will fail when it next tries to use the device).
On LE9.2 hdmi audio output was under firmware control and could mix kodi's audio output and alsa audio output (both ended up in VC4 firmware).
Now hdmi audio output is under Linux control and the audio device doesn't support mixing multiple streams - you have to use pulseaudio do to that.
so long,
Hias