Two accounts, told they can't be merged, For some reason one uses my friend's Gamertag

I have two xbox accounts I learned today. One has the Gamer tag D3M0NMUFF1N and the other has Phaminus. The first is my old alias and what I played on with my xbox, but apparently I put a typo in my email when registering the account and the email address
does not exist. The other has the correct email, but Phaminus is an alias that my friend uses [...] I can't afford to buy sea of thieves a second time to put it on that account as well as lose all my progress.

First of all, even if the email doesn't exist because of a typo, the Microsoft Account is "only" a username with a string of characters that looks like an email address. So even if the address doesn't really exist, you should be able to sign into that account
and use it. Still, I'd recommend you add the correct email as the primary sign in alias at
https://account.microsoft.com.

As for the "Phaminus" Gamertag: It shouldn't be possible for two accounts to have one and the same Gamertag. Maybe your friend has a "similar" Gamertag with the "i" being replaced by an "l" (small-case L) or something like that.

You don't have to buy Sea of Thieves a second time, as the owner account of Sea of Thieves can simply set the console you're usually playing on as that account's "Home Console", allowing everyone to play that account's games on that console.

As for changing your Gamertags: Unfortunately, there is no way to get a free Gamertag change. You can either move your account(s) to a different email address by adding your desired email for that account as a sign in alias, or pay the equivalent of 10 US$
to buy yourself the Gamertag change.

You can change the email associated with your account: https://support.xbox.com/en-US/my-a...nt/change-email-sign-in-for-microsoft-account

Hey mate, I'm having a little trouble understanding. Do you want to merge two accounts together or are you trying to change the MS account (email) associated with the gamertag that has gold?

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If you want to merge the accounts together, that unfortunately is not possible.

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If you're looking to change the email please take a look at the steps here:
support.xbox.com/.../switch-gamertag-to-different-microsoft-account

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If for some reason you logged-on to xbox.com with the Microsoft account that isn't associated with a gamertag it would have created a random one which is why you're getting that error.

You can't merge two accounts. You can join live with the offline account to keep using that one.

You mean you have a local profile on your 360, that isn't connected to a Microsoft Account and email address - as a Silver or Gold account could or would be - right?

As Zen Like Calm said, you can't merge the accounts, but you can
click here to learn how to change your non-Live profile into a Gamertag, and then you could go ahead and put that account onto your One for uh, whatever reason.

But merging accounts, no, you can't do that. =)