I think this is an issue with iOS not realizing that it's taken out. I know you already reset but can we try that once again and also hard-reset your iPhone?
You already know but will put here anyway for the reset/re-pairing
Settings > Bluetooth > Airpods > Forget this device. Confirm it.
Put both Airpods in their case, charge them via Lightning for a few minutes (or preferably until the case is 100%). Unplug them. Open the case and hold the button on the back of the case for 15+ seconds or until the light flashes white. Hold them near your iPhone and see if the pairing screen comes up and pair them. If not, repeat until it does. But if you can't see the screen pop up, then manually pair within Bluetooth.
Then hard-reset. I don't know which iPhone you have so just see here: https://support.apple.com/guide/iphone/force-restart-iphone-iph8903c3ee6/ios
If it doesn't work, open a case with Apple Support here: https://support.apple.com/airpods