Some teachers have received a notification that states "student has met maximum allowed attempts," with a greyed-out button. This is in spite of Allowed Attempts being marked as unlimited.
I m interested to know about this issue as well. If the number of attempts is set on the assignment to unlimited, I would think that the allow another attempt button would not be active(no reason to give another attempt when they have unlimited). By the way, for the condition you are stating, is the assignment still open? I.e. has the until date/due date been reached?
I worked with @fmpruett on this and yes the assignment was still open. The resubmission button is a new feature to put an assignment back in the "to do" so they fix it after already submitting and receiving feedback.