All Salesforce usernames are unique, for all users, across all Organizations (including Trial Orgs, Production orgs and Sandboxes). If you're getting this error, you'll want to go through all of your Orgs and find where the username is in use. Also, check your Inactive Users.
Customer Portal/'Community username - We can use a Customer Portal/'Community username in multiple Organizations, however Internal (CRM) usernames have to be unique across all Organizations.
Note: You may change the username if you have the "Manage Users" permission. If not, please contact your System Administrator for help.
1. Click your Name | Setup | My Personal Information | Personal Information (if 'Enable Improved Setup User Interface' is disabled) OR
2. Click your Name | My Settings | Personal | Advanced User Details (if 'Enable Improved Setup User Interface' is enabled).
3. Click Edit.
4. Modify the Username and ensure it's in an Email format.
5. Click Save.
1. Click Setup | Administer | Manage Users | Users (if 'Enable Improved Setup User Interface' is enabled) OR
2. Click Setup | Administration Setup | Manage Users | Users (if 'Enable Improved Setup User Interface' is disabled).
3. Click Edit next to the User's name for whom you need to modify the username.
Good to know: The username and email address may be different, which is okay. The email address should remain the same, as that field does need to be a valid and current email address. That's where you'll receive password resets, etc.
For security reasons, Salesforce personnel can't change usernames - This change must be done by the user or by an administrator within the organization. For trial accounts it'll be the person that has signed up for the trial.