Both the words سَوء with a 'fatha' on the seen and سُوء with a 'damma' on the seen stem from the root seen waw hamzah, which means to be bad, or evil. The difference between them is that سَوء is a verbal noun - the noun that is formed from a verb, while سُوء is an independent noun in itself.
Their differences are made more evident in their usage. If someone is described as a person of 'سَوء' it means that the person is inherently bad in their entirety and in all of their qualities. Anyone who interacts with such a person would have nothing good to say of them. In this regard, Allah described the people of Prophet Nuh as a group of people who had no good in them- قَوْمَ سَوْءٍۢ - and thus they were all punished by drowning.:
وَنَصَرْنَـٰهُ مِنَ ٱلْقَوْمِ ٱلَّذِينَ كَذَّبُوا۟ بِـَٔايَـٰتِنَآ ۚ إِنَّهُمْ كَانُوا۟ قَوْمَ سَوْءٍۢ فَأَغْرَقْنَـٰهُمْ أَجْمَعِينَ And We helped him against the people who rejected Our signs- they were evil people, so We drowned them all. (21:77)
On the other hand, the word (سُوء) is used to describe a person or thing that has one or more bad qualities, but cannot be said to be entirely bad. They may sometimes exhibit bad qualities, but may also sometimes exhibit good. The specific bad quality can often be identified through the QUr’anic context. For example, Allah described the people of Fir’awn in Surah al-Baqarah verse 49 as subjecting Bani Isra’il to - سُوٓءَ ٱلْعَذَابِ - a terrible torment. The usage of the word سُوٓءَ and not سَوء here indicates that their treatment was not always, entirely, absolutely bad. And Allah knows best.
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Assalamu Alaikum Beloved brother and sisters Quite understood that whether dead or alive, good or bad, poor or rich, sorrowful or happy, Allah always remains forever merciful, I mean 'Especially Merciful'. Bismillah!