If it should work and it does not, you probably need to submit a ticket with Safe:

https://support.safe.com/hc/en-us/p/Support

I can’t help you as I really do not want to install Pro 3.5, we are using a different version for production and I have mixed experiences with having multiple versions of Pro installed on the same machine.

For me, 2025.0 does work with Pro without a problem, I don’t need to set a custom Python interpreter to work.

Also, it looks like you are not the only one with this issue.

WoW ! What a good reason not to upgrade now! 

Another post on this

For what it’s worth, I have no issues reading a file geodatabase with ArcGIS Pro v3.5.0 and FME v2025.0.1 (build 25220). Would be curious to hear if you are on v3.5.0 or v3.5.1

Hello,

Several of our clients have experienced the same issue when using ArcGIS Pro 3.5+ with FME Form 2025+.
After multiple investigations, it seems possible that the problem originates on Esri’s side — although according to Esri, the bug occurs specifically when running FME from within ArcGIS Pro and using Data Interoperability.

Esri’s workaround for ArcGIS Pro is as follows:

Use an ArcGIS Pro 3.5 Single Use license, Concurrent Use license, or ArcGIS Online Named User license. To use these license types, the extension license must be provisioned and authorized.

Here is Esri’s official post on the matter:
https://support.esri.com/en-en/bug/starting-fme-workbench-within-arcgis-pro-35-with-named-bug-000176700

It remains to be confirmed whether this has any direct impact on FME Form, or if the two situations are unrelated.

On my side, I have not encountered any issues using ArcGIS Pro 3.5 and FME Form 2025.1.1 with an ArcGIS Online Named User license.

One possible approach to try, with no guarantee of success, is to add the following paths to the system environment variables (in the Path variable), then restart the machine and test again:

I just wanted to confirm there are licensing errors with ArcGIS Pro 3.5. We’ve recently received numerous tickets related to this Esri licensing error message from those using ArcGIS Named-User licenses served by ArcGIS Enterprise for both FME Form and Data Interoperability.

As ​@vincent_aalalou mentioned, the licensing failure experienced is indeed caused by this Esri bug:
https://support.esri.com/en-us/bug/starting-fme-workbench-within-arcgis-pro-35-with-named-bug-000176700. This issue seems to be limited to ArcGIS Pro 3.5 Named Users served by ArcGIS Enterprise. In that Esri bug description, Esri mentions: “The fix will be backported as an ArcGIS Pro 3.5.3 patch release in August.”

Now, if you are using a Named-User license served by ArcGIS Enterprise you can downgrade to ArcGIS Pro 3.4, or switch to Single-Use, Concurrent-Use, or ArcGIS Online Named-User licenses, all of which are functioning normally.