You have a setting under usergroups "Can 'See' Users Who Have Chosen to be Invisible While Online". If you set this to no, that particular usergroup cannot see who's online anyway. So it doesn't matter what is displayed whether it's "username" or "invisible", they can't see it anyway.
If you have that setting to on, then it will display username* (with an asterisk)
If you don't want them to see who's invisible, then you should set it to "no"
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