We created an SO for an item but we incorrectly set up the item. We just turned on CAN BE FULFILLED/RECEIVED on the item set up but even after doing so we are unable to fulfill it on the existing SO. Is there any way to update the SO so that we can fulfill the item?

you will need to have the ability to edit sales order for that. provided you have one and the item is up[dated with the new configs copy the line with that item on the sales order (so that you have your new item line) and then delete your old item line. Save. You should be good to go.

Thank you @Karina