Animating in prefab isolation mode is not a supported workflow.
Thank you for bringing this issue to our attention. Unfortunately, after careful consideration, we will not be addressing your issue at this time, as we are currently committed to resolving other higher-priority issues, as well as delivering the new animation system. Our priority levels are determined by factors such as the severity and frequency of an issue and the number of users affected by it. However we know each case is different, so please continue to log any issues you find, as well as provide any general feedback on our roadmap page to help us prioritize.
Forum announcement: https://forum.unity.com/threads/animation-status-update-q2-2023.1445425/
Roadmap: https://unity.com/roadmap/unity-platform/3d-characters-and-animation