it is still possible to use the Markup tool. It is the same on iOs 16 and iOS 17: Edit photos and videos on iPhone - Apple Support (caution: The Markup tool has changed in iOS 17. It is more involved to draw circles or other outlines around objects, as the default is now that the shapes we add will be solid shapes, not hollow. And the magnifier tool has been removed and replaced by the tool to add stickies. Don't upgrade. if you need the Magnifier tool)
Have you tried it this way?
"Write or draw on a photo
- In Photos, tap a photo to view it in full screen.
- Tap Edit, then tap .
- Annotate the photo using the different drawing tools and colors. Tap to magnify or add a caption, text, shapes, or even your signature.
- Tap Done to save your edits, or if you don’t like your changes, tap Cancel."
The button with the pencil to open Markup will appear at the upper border of the display, when you are in Edit mode.
Which of these steps is not working for you? Where ist going wrong?