Hi Dear,
Thank you for posting back in Microsoft Community.
I truly appreciate you bringing your concern to us, upon reviewing your provided information that you have posted back, I realize that you’re still having issue on deleting loop workspace, I understand issue has affected your daily work. I have tested the behavior at my end I didn’t get any error in my end.
Note: I have checked the service health dashboard at the Microsoft end, where there is no related incident reported.
So, we recommend you report this issue to the related team as they have higher permission to investigate this issue from the backend. Please contact your Microsoft 365 administrator and follow steps in this article to raise a support ticket. For reference: How do I find my Microsoft 365 admin?
I apologize for redirecting you to related development support team because the moderators in this community are limited with the resource for further investigation and to get a quick resolution to your problem, we requested it.
Thank you for your attention and cooperation.
Best wishes
Sophia