It seems the Portal Interface might be bugged.
Go into the Virtual Network and Delete the ACASubnet
Then open a CloudShell and run:
az network vnet subnet create --resource-group RG1 --vnet-name VNET1 --name ACASubnet --address-prefix '10.0.4.0/23'
Once the subnet has been created using the CLI
You should be able to select the Subnet in the VNET: