"Person B was a silent partner."

There is no such terminology for Tax purposes. Person B was:

Partner in a Partnership or corporate entity which owned the property

Co-owner on the title

Lender to Person A, who is the sole owner and the title; sublevels:

with or without a mortgage, and with or without a note payable executed between Persons A and B

And this property was being reported as in some sort of operation, by Whom, on Which Tax Form, during that ownership which must be defined and described per its reality.

"He then turned around and paid Person B the funds he was entitled to and provided him with a 1099-S for his share of the proceeds."

But that is issued to a Seller, and you kept stating this is Partner, or Nominee, not Seller. Your client is not the issuer of a 1099-S and the Person B is not a Seller, in your descriptions. Did you read the instructions for who issues a 1099-S? And for which type of sale it applies to? Your client did not "close" someone else's sale.

"Building 1 sold for $500,000 and Person A did a 1031 exchange for Building 2 for that amount."

Then you already have a problem, if Person B was supposedly involved. Or, Person B was only a lender to Person A. Because your Person A cannot Exchange something on their own, if they are not the legal owner of that something. You cannot sell or exchange other people's property, not even if you are a Partner or partial owner in it.

And at this point of that first exchange, your two people needed to renegotiate the original deal, because you already told us this Sale was supposed to benefit both of them. if only Person A makes the exchange, that leaves Person B out of the exchange.

"My question here is where to put that $200,000 in Pro-Connect."

Nope; that's not the first question at all.