What you are seeing on Form 8606 is correct. All of these transactions are treated on Form 8606 as if they occurred essentially simultaneously on December 31, 2023, so some of your basis acquired from the nondeductible traditional IRA contribution that results from the recharacterization will apply to the earlier traditional IRA distribution.
If you recharacterize, be sure that on the page where TurboTax asks for your year-end balance in traditional IRAs you also enter enter it the box for outstanding recharacterizations the gain/loss amount transferred from the Roth IRA to the traditional IRA as a recharacterization. Failure to do this will result in the amount on line 6 of Form 8606 being slightly lower than it should be, causing an incorrect, lower taxable amount to be calculated.
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