Hi @J-3804 ,
Welcome to our forum!
Does this issue occur with specific emails with a category or all the emails with a category?
How were these emails categorized and how did you delete the category?
And do other users around you encounter the same issue?
Through my test on Outlook 365 client(version is as shown in the below figure), I can clear the category of emails & contacts successfully(right click the email>Categorize>Clear all Categories) and the email is the same on web mail without any categories, which doesn't reproduce your issue. What's the version of your Outlook? (File > Office Account > About Outlook). please make sure you have upgraded your Outlook to the latest version.
Considering the data file or profile may be damaged in Outlook client, it's suggested that you could create a new profile(control panel>mail>show profile>add) and add the account to check if there are some differences.
In addition, as I know, it will also be affected when the outlook program itself is damaged. It is recommended that you try to fix the Office application.
If the above doesn't work, please provide more information about the questions at the beginning of the reply for our better research.
If the answer is helpful, please click "Accept Answer" and kindly upvote it. If you have extra questions about this answer, please click "Comment".
Note: Please follow the steps in our documentation to enable e-mail notifications if you want to receive the related email notification for this thread.