Go back to wireguard and examine the routing table on the server.
I'm not sure why you keep finding that route_allowed_ips breaks something, as it should not.
Also of course all your subnets need to be unique within your networks, 192.168.1.0 can't be used somewhere else.
It only breaks things if I have masq disabled on VPN zone and the static route on the server of 192.168.1.0/24 via 10.7.0.2
Otherwise route allowed ip's works.
I don't have any other devices in the chain that use the same IP range so there should be no conflicts.
VPS routing table:
Kernel IP routing table
Destination Gateway Genmask Flags Metric Ref Use Iface
0.0.0.0 VPS IP 0.0.0.0 UG 100 0 0 ens3
10.7.0.0 0.0.0.0 255.255.255.0 U 0 0 0 wg0
10.8.0.0 0.0.0.0 255.255.255.0 U 0 0 0 tun0
VPS IP 0.0.0.0 255.255.255.255 UH 100 0 0 ens3
192.168.1.0 10.7.0.2 255.255.255.0 UG 0 0 0 wg0
Is this OpenVPN. What happens if you disable OpenVPN on the VPS. I'm wondering if you have conflicting routes.
Yes it's OpenVPN and I recently reinstalled it on the server. So It wasn't installed when I was testing wireguard previously.