Users suddenly getting insufficient privileges when trying to attach a file to an outgoing email from Activity section.
I am having the same issue in our org. The user reported it happening on October 7th. I have gone through the same steps and checked the setup audit trail /sharing settings and nothing has changed or looks out of the ordinary. I did check with other users in the same profile and they are also experiencing the same issue. My current running theory is that the org was upgraded to Winter '19 on October 5th and maybe something in the update is causing the issue. I checked the release notes, particularly the Files section but nothing I saw looked like it woudl affect this as they are still on Classic.
If you hear anything back from Salesforce support please let me know. This is a wild one.