On my first read, I got what your colleagues got, a classic example of a dangling modifier:
- Madrid seems hot and noisy after living in Venice.
- Madrid after living in Venice seems hot and noisy.
Cf. Max seems happy after living in Venice.On my second read, I got the meaning your native speaking colleagues and friends got:
Max after living in Venice seems happy.
- Madrid seems hot and noisy after (my) living in Madrid.
The assumption being, or rather native intuition tells us Madrid, a place, cannot live in Venice, and so the utterance in question is not ambiguous, not a dangling modifying, and perfectly understandable.
Who's right? Both groups, of course.