the phone is currently assigned to a Limited extension. 
You want to assign it to a User extension

2 ways to go about it.

1. 
Delete the limited extension to free up the phone that’s assigned to it.

Phone System > Groups > Limited extension > find the extension > 3 dots (the ⋮ symbol) > Delete
Once you delete the limited extension it will turn into “Unassigned limited extension” 
at this point the phone is still associated with the “Unassigned limited extension” so you are not able to assign it to another user.
Click the 3 dots again (the ⋮ symbol) and delete the “Unassigned limited extension”
You will get a pop up asking you if you want to keep the phone number of the unassigned limited extension in inventory or not. Whatever you choose - it is done. You should be able to use the phone on another extension.



2.
Phone System > Phones & Devices > Common Area Phones > click on the phone > Change phone

In doing so you are assigning a different phone to the limited extension. This frees up the phone that’s currently assigned to it, so that it can be used elsewhere. 

(you can even replace the phone that you need with an imaginary phone for example 
Change Phone > Bring your own device > select a random Yealink and use a fake 12 character MAC address - It just needs to be digits 0-9 and letters A-F for example 1a2a3a1abcde - this is obviously a fake MAC, but it passes the validation check and the system accepts it)