After soaking both members of Purple team, Blue team can chain lightning damage off of soaked targets on the enemy team just fine, the complication comes when both members of the Purple team inflict eachother with lightning damage while adjacent to eachother.
Purple 1 is Soaked, and uses thunder steps on Purple 2 who is also soaked, but the lightning damage doesn't chain through either of them if they are attacking eachother while confused, this is primarily relevant in PvE mostly given that confused enemies will run up and hit eachother.