I think this thread is starting to get a little confusing for everyone, since we are really discussing several different problems here, which just happen to have the same outcome. To summarise:
- There were issues with just the diagnostic which have mostly been fixed at this point, except for the problem that @rsebbe is describing.
- There is the general problem of actual diamond-shaped linkage in projects, for which currently the only solution is manually changing your project as a workaround. We aware that this is an issue for many people and are investigating a solution.
- There is an entirely separate issue which happens only for Xcode previews which is related to all package products being built dynamically in Xcode 12 to enable previews. It is also something we're actively investigating. There is no workaround for this, since users do not have control over how builds for preview are being done.
The DISABLE_DIAMOND_PROBLEM_DIAGNOSTIC setting only helps in the first case, because there isn't a real problem being flagged. In all other cases, it won't actually help because the diamond-shaped linkage is real.