This was introduced earlier, most probably in F38, since I did a successful grub2-install on F37 but ran into the same issue as the OP in F38 (see this thread).
I also ran xfs_repair & grub2-install again, with the latter only resulting in more than doubling the amount of errors reported. I have 1Mb of space before the first partition (holding /boot), with this layout created back on F31 (I think) & upgraded release-by-release using dnf system-upgrade; I ran grub2-install for the first time when upgrading to F37 & it worked there without any issues.
Like the OP, I use this VM to test upgrades before proceeding with the actual physical host. My host’s layout had 32k of space before the first partition & grub2-install in F37 was failing until I moved the start of the first partition (Dell diagnostics) from sector 63 to 2048, then worked flawlessly. I skipped grub2-install when upgrading the host to F38 & can keep doing that from now on, but would love to recover the VM; I unfortunately don’t have a snapshot to rollback to…