I think Napoli not want their best striker move to a Serie A club, especially Milan because Milan is Napoli toughest rival so far. Also Osimhen contract with Napoli will ends in 2025 and maybe if his contract has ended, he will play in the Premier League because Osimhen also really want playing at there. Also maybe Manchester United still want his services, if they can bring Osimhen without a transfer fee that's good for they anyway. But for this season it is likely that Osimhen will still play with Napoli, meanwhile the offer made by Saudi rumored already rejected by Osimhen.
Your argument is not entirely incorrect, but it is not entirely accurate either. The issue of rivalry sometimes acts as an obstacle for players to join a rival club immediately. However, there is one condition under which a club might agree to transfer a player to a rival: when the player consents to the move, despite the risk of being considered a traitor by fans. For instance, at present, Ketelaere is in the process of negotiating a loan (permanent option) to Atalanta, who also happen to be rivals for Milan.