DIAGNOSIS The carafe sensor arm (that little plastic lever inside the carafe station) is probably stuck in the 'up' position, tricking the machine into thinking a carafe is always there. In carafe mode, it limits single-cup brew sizes.
FIX Open the carafe lid and look at the right side of the station. You'll see a small black plastic lever. Manually press it down and let it spring back up a few times. Make sure there's no coffee grounds or a stray splatter ring from the carafe itself blocking its movement.
IF THAT DIDN'T WORK There's a secondary calibration you can try. With no carafe present, press and hold the 10oz and 12oz single-cup buttons simultaneously for 3 seconds. The display will show 'CLR' briefly. This resets the single-cup volume settings.
HEADS UP If you use the official Keurig glass carafe, the clear plastic ring on its base can warp from heat and permanently hold that sensor arm down. Try brewing without the ring on the carafe to test.