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Something is stuck in Photoshop. I think you probably need to reset the Photoshop preferences. To do that, go to the general section in the preferences and select reset on quit. Then restart Photoshop. After restarting Photoshop, don’t change any preferences other than turning off Auto Show Home Screen which you have to do. Then try it again.
I wonder if the way you have it set up without the solid background in Photoshop is messing with it. After resetting the preferences, try running it with Photoshop setup with the default solid gray background without being able to see the programs behind it. Then if it works, try setting it up like you have to see if that then causes the issue.