Psychonauts 2 preload on GamePass failed
I selected install on Psychonauts 2 several months ago, hoping it would preload so I could play at launch, it did appear to preload, downloading about 10GB of files a week ago.
However I was unable to run the game at launch time. Nothing happened when I tried to launch the game.
Checking for updates in the MS store resulted in a loop where the install would rapidly switch between "downloading" and "complete".
I resorted to deleting the original install (which windows reported as taking up 54.5GB) and redownloading the game. This prevented me from playing at launch but after re-downloading it it now launches.
Try uninstalling it again and force a hard reset on the Xbox
Depending on which xbox you have look up how to hard reset.
I had this same issue when I continued to play cold war from Xbox one to Xbox series X and this worked for me.
Make sure Microsoft store app is updated too don't stop it updating if this is stil to be done.
Once done reinstall the game. You won't loose any saves or games your just forcing the console to lose what junk it has in it's memory.
Hope that helps.