I had this exact same issue and reported it to Microsoft. They basically suggested the same workarounds of using the advanced lookup dialog to change the field, or tabbing over it to delete. However, they did state that a fix is due to roll out on 9/12 (I'm assuming December 9th), so this issue should be fixed soon.
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Tom Pickles
Business Systems Developer
Visit Scotland
Edinburgh
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Original Message:
Sent: Nov 29, 2022 07:22 PM
From: Tina Silver
Subject: Owner/Assigned of Case can't be deleted now that Teams status is showing
Recently we had a change on the Owner/Assigned To field, where we now see the full users' Teams/Microsoft status instead of just the colored dot. Now when we try to update the Owner, we don't get the X to delete the name and put on the new owner. We can click into a field above it, and then tab down to the Owner field and use the Delete key. But that is extra clicks. I tried lengthening the field, but that didn't help either. Does anyone have any ideas for me? 
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Tina Silver
Sr BSA, CSM®
SR Smith, LLC
Canby OR
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