If I purchased a digital game on PC Xbox app, do I need to rebuy the games/dlc again for...

It depends on the games. If they support Play Anywhere, you won't have to repurchase them. If they don't support Play Anywhere, you will have to repurchase them.

I am downloading the DLC from the Microsoft store app on PC, I went to the add-on management section where it has all the DLC listen but there's an icon like this "(!)" saying "this wont work on this device". Yet again the base game is working fine.

This is a digital copy and again I am not on console but PC.

The ability to transfer without having to rebuy the game only applies to digital content. Since you have it on disc, you would either need to purchase it digitally it play on a Series S or purchase a Series X to use the disc drive.

None of that worked. I still show the DLC in my purchases, but in the Xbox Gaming App I am prompted to purchase the DLC again.

Once again...the DLC is confirmed to have been purchased. I have already used it previously. It stopped working yesterday. None of the steps you suggested work. Uninstalling the game and reinstalling didn't work. I have contacted the game developer already, but this seems to be a known issue with the Microsoft Store or the Xbox Gaming App for PC according to other users: https://answers.microsoft.com/en-us/xbox/forum/xba_gapp-xbo_xboxwin/world-war-z-purchased-upgrade-and-items-are/d15525aa-a673-47f1-9c04-db2438486897?auth=1

I was on with them for an hour. He had me factory reset my system. When that didn't work, he tried to refund the game to me but the bank account used to purchase the game was closed so I'm hoping for credit. The reason is so I could have the option to rebuy
it digitally again (which I don't currently have).

Anyway, he had me uninstall/reinstall it and said he would call back in an hour or two.

I waited for ready to play and tried to play it again and got "Do you own this game or app?" Gah...