I did some more testing today.
$LTIGradeMode = ''
No errors, works over LTI
$LTIGradeMode = 'course'
It works with LTI, but a grade submission causes the following error
WeBWorK::Authen::LTIAdvantage::SubmitGrade::warning: LMS lineitem is not available for the course
$LTIGradeMode = 'homework'
LTI login works, but no homework sets are accessible with the following error
The selected problem set (Demo) is not a valid set for <my username in BrightSpace>
I was wondering if you have seen this issue before with LTI 1.3. Thanks.