Sale of primary residence

This took place in California, a community property state. Taxpayer
and spouse were divorced, and spouse transferred his ownership
interest in the house to Taxpayer.
Taxpayer sold the house in 2018 and made less than $250,000 profit.
My question is whether Taxpayer qualifies for the $250,000 exclusion
of gain from taxes.
Pub 523 says:

"Separated or divorced taxpayers.
"If you were separated or divorced prior to the sale of the home, you
can treat the home as your residence if:
*You are a sole or joint owner, and
*Your spouse or former spouse is allowed to live in the home
under a divorce or separation agreement and uses the home as his or
her main home."
Should that "and" in the first bullet be an "or"? Surely it's highly
unusual for a former spouse still to be allowed to live in the house
after a divorce.
The following paragraph in the pub is:
"If your home was transferred to you by a spouse or ex-spouse
(whether in connection with a divorce or not), you can count any time
when your spouse owned the home as time when you owned it. However,
you must meet the residence requirement on your own."
That seems to match Taxpayer's situation, since she had lived in the
house continuously for 20 years and they, or she, owned it
continuously for the same period. But I just wanted to make sure,
because those two paragraphs don't seem to agree with each other
completely.

That passage is talking about the person who is no longer a resident in the home and doesn't otherwise qualify for the exclusion because of that.
The code (section 121) simply says that you can qualify for the exclusion based on your ex-spouse's residence in the property. The ownership requirement is not changed.
In your case the Taxpayer qualifies for the exemption irrespective of the divorce, so the divorce is irrelevant. If the spouse lived there for the last three years and then the property was sold, the Taxpayer would still qualify, but only because of that provision in the code.