Question:

Why are contacts without an envelope icon showing on reports generated for unregistered contacts?

Answer:

When a user record and contact record are linked, the registration icon (the envelope) is removed. This is because the user record is registered, and the contact record is not.

Using the "Linked User" field with a false condition excludes contact records that have been linked with user records.

To generate a report of unregistered contacts see knowledge base article EBS: How to Create a Custom Report of Unregistered Contacts