Doing az capi create I get an early prompt that seems to miss the resource group:
Using generated cluster name "burley-nuthatch"
Could not find an Azure resource group, CAPZ will create one for you
Create the Kubernetes cluster "burley-nuthatch" in the Azure resource group "None"? (y/N): y
Doing
az capi create
I get an early prompt that seems to miss the resource group: