Tampering with the scale sets that Kubernetes creates is not supported which seems to be the case. Most likely someone has tried to install this extension directly on the scale set which resulted in failure without being able to remove it. As it has failed there is not actual installation but the extension resource is in some state that cannot be removed. That is also causing the issue when you try to apply the kubernetes configuration via Bicep. My advise would be to re-create the AKS cluster or try to replace the current system pool with another one. You can also try to contact Azure Support to see if they can force the removal of the extension but it is unclear if they will provide support for something they have explicitly said it is not supported.