user=user
Leave it as automatic. Settings it to User causes it to perform the action on the user triggering the trigger. In this case on the Moderator approving the user and not on the user being approved. Please be sure to review the information next to each input carefully as this is explained in further detail.
I tried using [username] in the Group Owner option in the action but still the approve user doesnt became the group owner
It needs an ID (e.g. [user_id]), but if User is set correctly you can leave this blank.