Hello @Davidog
QA looked into this, essentially this is a rare scenario where the player who is Homegrown at a Welsh club playing in the English league system (in this case, Swansea) is counted as English Homegrown for the purposes of domestic squads, but does not count as English Homegrown for UEFA competitions (whose Homegrown definition is dependent on based nation rather than the nation league system they were in).
So this isn't a bug in the sense that Daniel James is correctly counted as HG for domestic comps and non-HG for European comps.
We're sorry for the confusion.