This glitch is very big problem I tried to research lots of ways in the internet but still the steve Glitch is one of the most annoying problem for me and it also happens on when you join LAN that my friends are using custom skin and I see them as steves, this also happens on multiplayer games.
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If just the skins are steve then you may need to go into your profile settings and turn "only allow trusted skins" off.
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@tmezz thanks for the solution but it's still not fixing the steve glich
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We're tracking this issue in MCPE-78206, so this ticket is being resolved and linked as a duplicate.
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Ever since you Updated Minecraft to 1.17.0, The Steve Glitch started.