System prevents reusing an email for a new user despite being cleared from an inactive account

When attempting to create a new user with an email address, the system returns an error:
"Contact already exists"

This email was previously assigned to a user who is now:

Inactive
Email field is empty (cleared)
Despite this, the system still blocks the reuse of this email address.

Required actions:

Investigate why the email remains "occupied" even after being cleared from an inactive user.
Remove the email association from the old account to allow its reuse for a new user.
Ensure proper handling of email addresses when deactivating a user or clearing user data.
Expected behavior:
If an email address is not linked to any active user and the field is cleared, the address should be available for reuse.