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What does a native speaker say when someone asks you a favor, and you did something for them, but in the end, it didn't work out well. The person you helped said: "I'm sorry. I’m sure this is frustrating."

What is an appropriate response to say? "I understand your situation, it's okay." in business English?

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I'm a bit unclear as to the effect you're trying to achieve, but if by "I understand your situation" you mean to convey that you can relate to their frustration, you could say "I feel your pain." If by that you mean that you want to assure them that you aren't bothered by the fact that your efforts were in vain, you could say "It's cool, at least I tried." or "It's not a problem, trust me."

Also, by "business english" did you mean a more formal manner of speaking? In which case you should replace 'It's cool' with 'It's alright.'

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For the person doing what did not work well:

I'm sorry, I tried my best.

or

I'm sorry, I did the best that I could.

And in response:

Thanks anyway.

or

I appreciate your effort (even though there was no positive result).

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