DerbyDad03 wrote:

Code says that if you install a 3-hole outlet, it MUST either be
properly grounded OR, have a GFCI upstream of it

But doesn't code also say that the GFCI protection option is only
available for existing receptacles? I've found conflicting info on the
web, but most of the info I've found say the old circuits are
grandfathered, but anything new (like the OP's) situation is not
allowed to be simply protected by a GFCI and must be properly
grounded.

Do you know the definitive answer?

Yes you are right. I didn't catch the problem even when you pointed it
out the first time. The 2 wire circuit cannot be extended unless a
ground is picked up for the new boxes. For an extension that can be a
separate wire to permitted locations - usually anywhere on the grounding
electrode system or the branch circuit panel ground bar. (250.130-C)

Nice catch.

--
bud