I was also surprised to see this bug. This has been confirmed by Microsoft and a fix is on the way (no ETA has been stated). Note that logins aren't actually being set to Arabic unless I make a selection from the default language drop-down then re-select Arabic. I can see this by right-clicking a SQL login created through the GUI, Script Login AS, CREATE, and you will see the DEFAULT_LANGUAGE is my expected default language.
I don't have an issue changing the default language of an existing login. How are you trying to change the default language, through the same drop-down? Is this while you're logged in to the account you are changing?