How to stop capitalizing "i" at the beginning of words

Make sure the document with this issue is open. Check the app's auto-correct settings. If the app's auto-correct settings need to be modified, then make sure to re-save the open document in order to have the settings applied to it. I know when I've modified the auto-correct settings for TextEdit I must close the open window and start a new document window for the settings I just modified to apply.

Does the problem occur with a newly created document or only with previously created documents?

Are there any other custom auto-correct settings configured such as spellcheck or abbreviations? Are you using any third party apps/utilities that may be modifying system/app behavior like this?

Does this problem occur with just a single app or does it occur with other apps as well?

Try creating another user account and log into the user account. See if you still have the issue with the other user account.

Try booting into Safe Mode which disables third party startup items and login items. See if the problem disappears. If this works, then you know that some login item or third party software is responsible.