I have the same issue. I once fixed the issue by deleting the whole library file (after duplicating it into a hard drive) then made a new .library file and pasted all the songs in there, re-opened the music app and imported the whole thing. (You can ask the free chat gpt and get approx the same solition i think). This didn't work for me in the end as I write later but here's some things to keep in mind should you attempt it.
*Make sure you export all the playlists you want to keep from the menu bar (File>Library>Export Playlist) Then, when you reopen the music app you can import them again with File>Library>Import Playlist(after you import all the song files back).
I did this maybe some weeks ago.
However, today, it started happening again. It may be that my files are corrupted in some way (seems to happen when I convert a wav. file into the AAC ver.... but for me it's essential since wav files are too heavy.
The only work around I found for rearranging song orders is to create a separate new playlist, then copy&paste the songs up until the part you want to insert the new song from the END of the playlist, then copy&paste the new song then again copy& paste the rest of the songs (up till the START of the list), hope it makes sense.
I've read many threads on this but it seems we just have to be patient and wait for an update.
Another way is to download the playlist to your iphone etc, rearrange it there, then import to the mac again (it creates a separate new playlist on the music app I'm pretty sure)