To my understanding, this is not an issue going forward as she said her duty station was changed to MA, so seems they do not withhold MD taxes any longer, but I will confirm. ( Not quite sure the meaning of "duty station" here, since she does not serve in military, but works for DOD as an attorney, but perhaps, the federal government assigns you to a certain duty station?!)

Seems, we resolved the 2022 issue for now, and we all agreed based on their announcement that it should not be MD sourced income, thus we will claim zero under MD sourced income on MD non resident return so we get a full refund of all MD taxes paid. Claiming a credit on MA return just isn't as beneficial.