Doesn't solve the problem, but I thought this was an interesting equivalence.
Your question is equivalent to the the assertion:
There are no integers $a,b$ with $b\neq 0$ such that $a^2+b^2$ and $a^2+2b^2$ are both perfect squares.
Part 1: A solution to your equation gives a solution to mine
If $x-\frac{1}{x}+y-\frac{1}{y}=4$ for rational $x,y$, then there is a pair of nonzero integers $a,b$ such that $a^2+b^2$ and $a^2+2b^2$ are perfect squares.
If $x=\frac{u}{v}$ and $y=\frac{w}{z}$ then the equation is equivalent to:
$$(uz+wv)(uw-zv)=4uvwz$$
Now, if any prime power $p^k$ is a factor of $u$, then $p$ must be a factor of one or both of $uz+wv$ or $uw-zv$. Since $u,v$ are relatively prime, this means that $p$ must be a factor of $w$ or $z$, and, since $w,z$ are relatively prime, this means that $p^k$ must be a factor of $w$ or $z$. This means that we can write $u=u_0u_1,v=v_0v_1,w=u_0v_0,z=u_1v_1$ where $u_0=\gcd(u,w), u_1=\gcd(u,z),v_0=\gcd(v,w),v_1=\gcd(v,z)$. We get that $u_0,u_1,v_0,v_1$ pairwise relatively prime and:
$$u_0v_1(u_1^2+v_0^2)\cdot u_1v_0(u_0^2-v_1^2)=4u_0^2u_1^2v_0^2v_1^2$$
So you need a solution of $$(u_1^2+v_0^2)(u_0^2-v_1^2)=4u_0u_1v_0v_1$$
Now, since these are pairwise relatively prime, $u_1^2+v_0^2$ cannot be divisible by $4$. That means $u_0^2-v_1^2$ is even, so $u_0,v_1$ must both be odd, and thus $u_0^2-v_1^2$ is divisible by $8$, and thus one of $u_1,v_0$ must be even.
So we have that $\gcd(4u_1v_0,u_1^2+v_0^2)=1$ and $\gcd(u_0v_1,u_0^2-v_1^2)=1$, and hence that $$4u_1v_0=\pm(u_0^2-v_1^2)\\u_0v_1=\pm(u_1^2+v_0^2)$$
Now, if we have a solution to this equation, then we can find a solution with all the $u_i,v_i$ positive. So we want a solution to:
$$4u_1v_0=u_0^2-v_1^2\\u_0v_1=u_1^2+v_0^2$$
Substituting $v_1=\frac{u_1^2+v_0^2}{u_0}$ into the first, and expanding, we get:
$$4u_1v_0u_0^2=v_0^4-(u_1^2+v_0^2)^2$$
This is a quadratic equation in $u_0^2$ so we get:
$$u_0^2=2u_1v_0 +\sqrt{4u_1^2v_0^2+(u_1^2+v_0^2)^2}$$
Since one of $u_1,v_0$ is even, and they are relatively prime, we have that $(2u_1v_0,u_1^2+v_0^2)$ must be the legs of a primitive Pythagorean triple, and thus $2u_1v_0=2pq, u_1^2+v_0^2=p^2-q^2$ for some relatively prime pair $p,q$.
Since $u_1v_0=pq$, we can write $p=p_1p_2,q=q_1q_2,u_1=p_1q_1,v_0=p_2q_2$. Then you get:
$$u_1^2+v_0^2=p_1^2q_1^2+p_2^2q_2^2=p_1^2p_2^2-q_1^2q_2^2$$
And thus:
$$p_1^2(p_2^2-q_1^2)=q_2^2(p_2^2+q_1^2)$$
Now, $D=\gcd(p_2^2-q_1^2, p_2^2+q_1^2)=1$ or $2$.
If $D=1$ then $p_2^2-q_1^2=q_2^2$ and $p_2^2+q_1^2=p_1^2$, thus: $a=q_2$ and $b=q_1$ gives $a^2+b^2=p_2^2$ and $a^2+2b^2=p_1^2$.
If $D=2$ then $p_2^2-q_1^2=2q_2^2$ and $p_2^2+q_1^2=2p_1^2$. But this means that $p_2^2=p_1^2+q_2^2$ and $q_1^2=p_1^2-q_2^2$, and then $a=q_1,b=q_2$ gives the solution.
Part 2: A solution to my equations yields a solution to your equation
This is just reversing Part 1.
Assume $a^2+b^2=c^2$ and $a^2+2b^2=d^2$. Note that $$\begin{align}(dc-ab)(dc+ab)&=d^2c^2-a^2b^2\\
&=a^4+2a^2b^2 +2b^4\\
&=b^2(a^2+2b^2)+a^2(a^2+b^4)\\
&=b^2d^2+a^2c^2\end{align}\tag{1}$$
Let $$x=\frac{bd(cd+ab)}{ac(cd-ab)}\\y=\frac{ac(cd+ab)}{bd(cd-ab)}$$
Then you'll get, with help from (1) that:
$$x+y=\frac{(cd+ab)^2}{abcd}$$
and
$$\frac{1}{x}+\frac{1}{y}=\frac{(cd-ab)^2}{abcd}$$
So $$x-\frac{1}{x}+y-\frac{1}{y}=4$$
Part 3: Another equivalent
The requirement that $a^2+b^2$ and $a^2+2b^2$ is equivalent to the requirement that $c^4-b^4$ is a perfect square for some relatively prime $b,c$ with $b$ even (and $b\neq 0$ in both sides.)
If $c^4-b^4=k^2$ then $c^2-b^2$ and $c^2+b^2$ are relatively prime and hence squares, and hence $a^2=c^2-b^2$ and $c^2=a^2+b^2$ and $c^2+b^2=a^2+2b^2$ are both squares.