Hi @PoptartJuniper - I did a small test with a sim at fitness level 2, but was unable to replicate your issue. I am playing on PC, base game with RG & freebie addons no cc or mods, never used.
My sim got the fatigued moodlet, but it had a timer (also added a sore muscles moodlet when I had her sleep for a time). The timer counted down properly and reduced with sleeping and bathing.
In your screenshot, the moodlet looks like the sim is doing some sort of physical activity that is still increasing the fatigue, although in your screenshot there doesn't appear to be any activity going on. Is there anything (club activity?) going on that the game might be stuck thinking your sim is doing? I don't know if doing laundry counts as a physical activity, I don't have any of the addon packs that you have.
What are your sim's traits and age group? Is he a lazy sim? Was the sim energized or very energized when exercising? Which type of exercise was he doing - cardio / treadmill / punching bag /weight machine / jogging, etc? What did the sim do after the exercise (any eating / cleanup / gardening?) Is there anything that you think it might be related to, or any other weird things going on in the household, like maybe weather related bugs or something? Just trying to narrow down anything that could cause the game to think he's doing something physical.
Also, does repairing the game make a difference?