Deleted Azure AD tenants should not appear as choices to associate with subscription
Thanks for the feedback! This is indeed a usability bug due to the fact that the directory deletion actually happens as a background task that may take a few minutes to finish. Looking into options to improve the experience.
Philippe Signoret commented
This is due to the fact that the true directory deletion happens as an asynchronous background process. After ~20 minutes, the deleted directory should no longer show up. We're looking into optimizations that would improve this experience.