frankel, I did some testing and everything seems to be working fine on my end. I went in as my Test Student and submitted the required assignment (Tell me About Yourself) and took the quiz (Syllabus Quiz) in Week 1, but didn't get the full 3/3 (I got a 1.25/3) and Week 2 was still locked for me.
Here are my Module settings:


My recommendation is to try out different scenarios with your Test Student and see if you can replicate the issue. Then, regardless of your findings, I'd definitely contact support to let them know that students weren't meeting the requirements and still able to access a prerequisite module.
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