Were the yellow lights dim or not on at all? If ONLY the red light was on Junior’s chart tells you why in the first item (normal operation). It says that the red light is powered by the Neutral to Ground slot. Obviously for the red light to be on the Hot wire must occupy one of those slots erroneously and the other slot must be either neutral or grd (complete circuit). The only real option that would light ONLY the red light is - Hot on the Neutral lug - Neutral open.
The outlet probably started life simply as a reversed polarity (fairly common). At some later point the neutral became open which leaves us with the current result.
A multi meter could have answered your question.
That or a “wiggy.”
Probably a loose neutral…or reverse polarity… I always say (in the report) that the explanations for deficiencies are not meant to be instructional but rather the reason the inspector is calling it out for professional review or repair. There can be several issues involved in addition to the one being called out.
It would have to be both, an open neutral and reverse polarity to light only the red indicator. One situation only would light different lights.
As far as what to write in the report I would simply say the outlet was wired incorrectly and may not operate.
Strange things happen…I had a similar situation when I installed a gfi once…and I thought wtf…then when I checked it was a loose neutral…I know…doesn’t make sense…because you’d think it would just show open neutral…