When you start a new game you cannot use any name previously used even though the game has been deleted. This indicates that a deleted game still exists in memory. It should not and did not in the previous version. This is permanent, the “used” name error message remains after completely exiting and relaunching the game.
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Ah, thanks for the report!
It seems the folder for that world still is on the disk, even though it’s empty.
We’ll fix that.
In the meantime, you can go to the saves folder and delete the town folder yourself, that should work.