"I have done that"

Done that, which part? This topic is not for tax year 2021 software. It's from ProSeries for preparing 2020 tax year filing. Is that what you are doing: 2020? ProSeries?

"and marked the entire amount or $25,000 as being converted to a Roth."

Did you look at the 1099-R? Did you use the 1099-R worksheet?

"The software calculated the taxable amount as $999. Why isn't it the full $25,000?"

There is not enough information here. Example:

There is Basis in the Trad IRA (nondeductible contributions in prior years). Or, you entered a Basis amount, and there isn't any.