For the user remove error seems like a server configuration as to the other servers I can remove and add users normally.
Solution
1. From putty use the following command
cd /home
2. Then remove username folder
rm -rf username
3. Delete the user from CentOS Web Panel (CWP) so that DNS records and other data can be removed.
Reason why that happened and solution.
Checking the quota to this server I noticed that I had no grace time so I used the following command to set grace time to 7days
edquota -t
And now everything is back to normal.