I have the same issue. I spent an hour on the phone with Apple and they don't have a clean fix for it. The issue seems to be with apps that developers have not yet set the Family share-able flag as yes or no. They said that when developers update the flag this will resolve itself. Meanwhile, if in the app store the details of the app under Family Sharing it says "Not Available" it will be an issue. I found a reasonable workaround for this particular issue by hiding the original purchase and "re-purchasing" as follows: Disclaimer/Note: Not all Apps are share-able, (even free ones.) If the app you are trying to deal with is an actual paid for app, you will be buying it again! Better to wait until the core issue gets fixed, unless you are willing to pay for it again.
1. On a PC or Mac, in iTunes, have the original purchaser log in to the iTunes store, then under Quick Links click on Purchased. Click on Apps at the top and find the app that is at issue. (Hint: The apps are not necessarily listed under the obvious app name. I was looking for Colorspot from SherwinWilliams, and found it under SherwinWlliams, not Colorspot.) Once you find the app, hover over it and click on the X in the upper left corner to hide it. Do this for all the apps that are at issue. (See Disclaimer/Note above)
2. On the iOS device that is having the problem, close the App Store app. (If you have many apps at issue you might make a list, or take a screenshot first)
3. On the same iOS device, find the app and delete it. (not ideal but it works!). Once you have all the apps at issue deleted, reboot, and make sure you are logged in to the iTunes store as the secondary "purchaser", (If you are logged in as the original purchaser you probably wouldn't have the issue in the first place, although to me that means going a bit backwards and not really using the Family Sharing program.)
4. Open the App store app, if you started the whole process with an app that wouldn't update, confirm that the app is no longer listed.
5. Search the store for the problem app as though it was a new purchase (at this point it is.) Once found, it should be listed with the "Free" or a "price" icon.If it shows the cloud and download arrow icon the hiding you did in step 1 hasn't updated yet. Wait awhile longer. (Reboot again? Re-log into store again?) (Also note here, that a properly shared appwillshow the cloud/download arrow icon and would be download-able without issue.) If it shows as Update, it hasn't actually been deleted from the device. If all is well, you should be able to proceed with a typical "purchase" of the item. (See Disclaimer/Note above) If the family member has multiple devices, repeat 2-5 for each device.
If you have multiple family sharing members wanting the app you will have to repeat step 1, hiding the purchase in each iTunes account until all family members have gone through the re-purchase process. After fixing all of their devices, each person can go back into iTunes, click on Account under Quick Links, go to iTunes in the Cloud section, Hidden Purchases line, click Manage, and unhide the hidden apps. This would be important for future sharing when the bugs get worked out.
Good luck!
