I have a user ID that I made inactive after creating a new user and name that aligns to our naming standards. The old user name is not associated with any groups and does not have any access enabled (removed his license).
To reproduce the problem:
While looking at a task/issue/etc, try to add the user as a watcher. Using the auto-lookup, type in the name and then you'll see the name appear. In my instance, the example is "Sofaine", you'll see two IDs appear. The Sof4Real is the 'old' ID.
Please ensure inactive users (those with no application access are not visible in the dropdown/selection lists.
Note: If I select the 'old' ID, the system tells me the user has no permission to see the issue.