This post is 2 month old, but I was wondering if anyone found the solution to the problem.
I’m having a similar issue.
The Glossary Term is identified correctly on the page. The Index Page is also generated correctly. It is only when one clicks on the term, that the displayed page returns the 404 (ie. “Sorry, no posts matched your criteria”).
See this: https://bxp07.breweryautomationexperts.com/glossary/
I’m using the Ultimatum Theme, and tried to use WP Standard and Custom Loops. Tried using WP Custom Loop with the post and glossary layouts (i.e. Post Types). No combination worked.
Cheers.