Bottom bracket replacement?

I recently tried to get rid of a creaking sound from pedalling. I removed the pedals, chain, crankset, chainrings and bottom bracket. Then I greased every bolt and put it back together.

Now as I try to mount the crankset (Microshift Sword), I need to tighten to preload bolt. However, either the crankset has play or the it doesn’t spin properly (see video). I cannot seem to find the sweet spot in terms of the right torque as I have to compromise either of the two.

Could the be an issue with the bottom bracket (Shimano BB-RS500)? Can I service it or do I need a replacement? Am I doing something wrong?

Thanks in advance for your help!