To reproduce:

1. Starting with Minecraft 1.16.5, install Fabric loader and Fabric API.
2. Install mobdisguises-1.0.0-fabric and disguiselib-1.0.2-fabric.
3. Create a new world with cheats enabled.
4. Find or /summon a wolf and tame it.
5. Click on the wolf, telling it to sit or stand. Without the disguise, the wolf obeys the new command.
6. Run /disguise @e[type=wolf] as zombie.
7. Click on the (disguised) wolf with an empty hand, telling it to sit or stand. With the disguise, the wolf does not obey the new command.

Workaround:
Instead of clicking on the wolf with an empty hand, click on the wolf with some dye (or food item when on low health). The dye/food may get consumed, but the wolf does change from sitting to standing or vice versa.