Fixed it by getting the UserTrackingAPI username created first and assigning it Admin role, then grabbing the Token API key, then updating Matomo Tracker Proxy with it.
The issue that tracking failure was popping up was that I had this username created and given No Access role, then created Token, then went back and changed role ---- but duuuuhhh it should have been Admin or Write role from the beginning and AFTER that create the Token Auth.