Hi @Rajasree Nair ,
We made a test in our environment, and we could not reproduce your issue.
This issue is relatively complicated, so let's do some troubleshooting.
1, Switch account to see whether only you have this problem.
2, Switch browser or use privacy mode to see whether the problem still exists.
3, Use PowerShell script set the value and see whether the problem still exists. Run below pnp PowerShell script as admin:
Connect-PnPOnline -Url https://domain.sharepoint.com/sites/Amy_TeamSet-PnPDefaultColumnValues -List Documents -Field "Status" -Value "pending"
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