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Hello Timothy Sayles,
Please try the steps in the AI-generated answer first, particularly the balloon and layout settings, as these control whether deleted text appears inline or in the document margin.
If the behavior continues, test Track Changes in a new blank document and make a small edit. If changes display normally there, the original document may contain a damaged or incompatible setting.
In that case, save a backup first, then copy the document’s content, except the final paragraph mark, into a new blank document and save it as a new .docx file.
As another workaround, open Review > Reviewing Pane and choose Vertical. This provides a separate list of insertions and deletions even when deleted text remains crossed out in the document.
Also check whether the document is protected under Review > Protect Document, since protection can prevent some tracking options from being changed. You can compare the file in Word for the web as well. If the web version displays it correctly, the issue is likely limited to the Mac app. If it happens in every document, contact Microsoft Support or submit feedback from Word.
Please let me know how it goes after trying these steps, and I'll be glad to continue looking into it with you.