Reading your report I’m thinking this could be a bug, but I’m not 100% sure so let’s start off trying to determine if this is a bug or not.
Note that there are two different multiplayer menus in the game.
The “main multiplayer menu” is accessed from main menu and has options such as “Find Game” and e.g. the “in-game friends list” (IF a befriended user has hosted a session that is available).
The other multiplayer menu is accessed when you have a session up (via "continue or “new game”) by opening the “pause menu” and select multiplayer. That menu has e.g. the “Who Can Join” setting. This option does not show in the “main multiplayer menu” that is accessed from the main menu. Unique with this multiplayer menu is also that it has the “invite” function.
IF a befriended user has hosted a session and set their “Who Can Join” setting to “Friends Only” or “Anyone” (NOT “Invite Only”) when you go to the multiplayer menu a button prompt should eventually show at the bottom of the screen, telling you which button to press (X) to access the friends menu where you can join sessions of friends
Note that it sometimes can take a few seconds before the “friends” menu button prompt shows up. If you know your friend has a hosted and available (open) session try to go out of the “main multiplayer menu” then back again and see if the button prompt shows up.
How To Join A Friend’s Session:
Player A: Has an active online play subscription (In this case an XBOX LIVE subscription)
Player A: Hosts a session via either “Continue” or “New Game”
Player A: After entering the session open up the “pause menu” and go into the “multiplayer menu”
Player A: Make sure that the “Who Can Join” setting is set to “Friends Only” or “Anybody”
Player B: Access the multiplayer menu via the main menu of the game
Player B: Open the “Friends” menu by pressing “X” (Note that it can sometimes take a few seconds before the button prompt shows up and the option becomes available - IF it doesn’t show try going out and back into the multiplayer menu again)
Player B: Select your friends gamertag in the list and press “A”
Note:
Don’t forget to “click” APPLY when changing the who can join setting.
There seems to be an issue with the “Who Can Join” setting where it doesn’t actually reflect what it is displaying, e.g. the setting showing as being set to “Invite Only” when in fact it’s set to “Anybody”. If this seems to be the case for you try setting it to another setting, apply, then set it back to the setting you want and apply again.
Let me know if this helps at all OR if you still have problems!