I don't really know much about Coverdell accounts, but here are a few thoughts:

Quite annoyingly, it seems like they don't need to report Basis and Earnings (see citation below). I have no idea why.  Hopefully your client knows their Basis.

Yes, I believe that only the earnings are taxable.  Why the program is doing that, I'm not sure.  Is this the child's return and the child is the recipient?  Have you tried temporarily saying that the child is a student (in case it is a glitch in the program and won't calculate things correctly unless it thinks the taxpayer is a student)?

I wish I could help you further, but I've never dealt with a Coverdell before.

For 2023, instead of dividing the gross distribution between your earnings (box 2) and your basis (amount already taxed) (box 3), the payer or trustee may report the fair market value (account balance) of the Coverdell ESA as of December 31, 2023. This will be shown in the blank box below boxes 5 and 6.

https://www.irs.gov/publications/p970#en_US_2023_publink1000178472