Unable to assign this e-mail address to the list, because the address is in use – FIXED
I came across this WSS error message today while working on incoming email updates and was stuck. The browser clearly showed the list has no inbound email enabled and offered no alternatives on how to enable. My enable failed, the address is taken, and I have no way to remove.
SQL Studio to the rescue!

OK. First of all I know, I know I know. TSQL against the databases even in read only mode is frowned upon. What I am doing here is far beyond supported, not safe, and I am a crazy man. Again, I know this. I had no other options and needed a solution.
DELETE FROM [SharePoint_Config].[dbo].[EmailEnabledLists] WHERE [Alias] ='my_old_alias'
The config database holds a central table the incoming email references to get the site, web, and list GUID for where to place the message. I found my old email alias in here despite the fact the web GUI showed it was disabled.

I wrote a select statement and copied the output to notepad in case I needed to INSERT this row back. I then changed “SELECT *” to “DELETE” and killed the one row. Flipping back to IE and clicking OK, it worked perfectly! Never had any issues since and this was weeks ago. Like they say on TV … “don’t try this at home”