Reset to Draft UI Action not working on Demands
This was happening due to the "Reset to Draft" UI Action itself being customized.
Once we revert this to the OOB version, everything works as expected.
To do so, follow the steps below.
1. Navigate to System Definition > UI Actions
2. In the "Name" column search for "Reset to Draft" and go to the record
3. In the Versions related list, Right-Click the most recent record with the Source of "System Upgrades: VERSION_NAME..."
4. Select "Revert to this version"
5. Select OK when prompted