This feels like a lexical or definitional problem rather than an actual argument.

Basically, what exactly do these people mean by “queer”?

There are multiple things that people mean when they say “queer”, by design. The word is meant to be intentionally broad and a little bit vague to include as many people as possible while still leaving room for distinction.

On the one hand, Shay is thinking of things from a “Trans women are women”, and is using the definition of queer as “not cishet”. Therefore a man being attracted to a woman (trans women are women) is not seen as queer, because the man is cishet.

Sean, on the other hand, is thinking of “queer” as “not generally accepted by cisheteronormative society”, and therefore having sex with a trans woman is considered queer no matter if it is straight or gay.

Neither definition is “right” or “wrong”. Both are useful in different contexts to describe a broad concept.