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No. Games marked as Private are excluded from sharing. This was added to the feature in the beta before it went live.
https://steamcommunity.com/groups/SteamClientBeta/announcements/detail/3865841912997760347
normally when owner uses any of their games, library cannot be used by those whom it is shared with. is it still the same for private game? does owner playing private game prevents others access to the library?
I have no idea tbh, my group just updated steam to the beta and we are currently using steam family library, we can play whatever we want whenever we want as long as we are connected to internet and there are copies of the game to play, also games marked private are not shared
That's with the old Family Sharing. The new Steam Families allows you to play different games at the same time regardless of it being set to private or not.
steam families are still in beta, what about live version? can the library be used by others when owner is using private game?
No. The old Sharing shares the entire library unlike the beta.
They are excluded from Sharing. The old sharing was updated to reflect Private games state months ago. And even if that game is Private, it locks the entire library from being able to be shared, on the old Sharing.