The issue was due to the following definition added in the wp-config.php file.

Edit wp-config.php and find the below line

define( 'DISALLOW_UNFILTERED_HTML', true );

And comment the above line. So now it looks like:

//define( 'DISALLOW_UNFILTERED_HTML', true );

You can now be able to edit the email templates and save.

Once you have completed the editing, please uncomment the definition. (Just remove the two forward slashes)

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