Each time, I dropped an user and try to recreate the user with the same name, I got the 42 error. See the photo attached. Do I have to do some other clean up after I drop the user.

Hello Kevin,

From what I can tell this is a com_contact error not a K2 error.
You need to deleted all your trashed contacts with the same alias.

You are right, they are in the contact as well. But why the user is automatic in contact list after they are created.

That is probably related to another plugin/extension.
By default K2 will not add or edit contacts.

I am not sure what else I missed. I still hit same error after I cleared everything in contact as well, the situation is I receive the error, but the user is created, but the contact doesn't have this yet. See picture I attached. I also clear the cache. No email is sent out for activation though.

This error is from com_contact so I am sorry but I cannot assist you with this because it is unrelated with K2.

Make sure you are not using any other 3rd party user components or plugins.