Hello UltraPureRoar,
Thanks for reaching out to Apple Support Communities. It sounds like you're having an issue with screen recording on your iPhone. We're happy to help.
When attempting to screen record do you have a USB-C hub connect to your iPhone? If so, does the issue continue when the accessory is disconnected?
Also, "Some apps might not allow you to record audio. You can't record your screen and use screen mirroring at the same time." You can view this information and more here: Record the screen on your iPhone, iPad, or iPod touch
Are you using screen mirroring when seeing this indicator in the status bar? If so, can you screen record as normal when not mirroring?
Additionally, we recommend ensuring there are no restrictions blocking screen recording enable on your iPhone. The article here can help you check your current settings: Use parental controls on your child's iPhone, iPad, and iPod touch
Cheers!