I’ve recently hit a terrible problem with SharePoint Online. Wanted to use site templates for Projects and Teams, but when creating the site template, I got some unknown error.
Actually, when creating the template, the .wsp package was created successfully, so I could see it in the Solution Gallery. But it could not be activated.
After over 2 months (!) of Microsoft support ping-pong (not a sports discipline of my liking), they finally found the error.
Seems like you shouldn’t enable versioning on the Solution Gallery library. Go figure. Once the versioning was turned off, activating site templates worked like a charm.
We accidentally activated the versioning in batch when versioning all libraries in a site.
Who knows, this may help you out 🙂