Unfortunately you are right. . Apologies to those I have misled.Unfortunately this is not correct. I updated my wife's phone to iOS 17.0.1 which now has a Recovery Key set and confirmed the bug still exists. Here are the steps I took to be able to reset the Apple ID password with just the iPhone Passcode:
- Go to Settings -> Screen Time -> Change Screen Time Passcode -> Change Screen Time Passcode and Tap Forgot Passcode?
- Enter your Apple ID and tap OK in the top right corner
- Tap Forgot Apple ID or Password?
- A screen will appear which allows you to enter the iPhone Passcode
- Success
There is a small but obviously important difference in your steps and mine.
The steps I followed in thief mode were:
- Go to Settings -> Screen Time -> Change Screen Time Passcode -> Change Screen Time Passcode and Tap Forgot Passcode?
- Entered Apple ID
- Tap Forgot Apple ID or Password?
- A screen appeared asking for Apple ID or phone number
- After supplying one of these I was asked for 28 digit Recovery Key.
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