OK i think I've solved it.

I think what you need to do is compare Y25 and AA25 as a conditional format, instead of looking for O or X.
By this i mean, select Z25, conditional formatting -> new rule -> use a formula -> =($Y$25=$AA$25) --- Green
Then do the same for red, select Z25, new rule -> use a formula -> =($Y$25<>$AA$25) --- Red

You can still use an IF statement in Z25 to show O or X, but now the formatting looks at the two cells (Y25 and AA25)