Hi there, I have the exact same issue and have gotten confusing explanations from support.
One thing that sometimes worked for me is copy the IG embed code, make an embed block, click the little grey </> on the prompt of the embed block, paste in the embed code. Then it shows up like an empty IG block in the preview, as if it didn't take. THEN save it and preview it, it shows up.
However, you can't have a caption on the block, and sometimes the layout does crazy things.