I tried really hard, but I couldn't reproduce it.
I even tried editing categories with weird special characters in the
slugs - even that didn't make the message appear saying "category not
updated" (although it didn't update the slug either, so that's a bug)
I tried editing the cat name and slug so that they were the same as a
Page name, but it allowed that.
A thought occurs that your permalink structure could be different and
that may affect it. Is your new category name already defined as a
term?
--
mrmist
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