You need to remove a lien holder from a title certificate?
Yes that is correct.
Did you sell the vehicle?
No I did not.
You need to get a lien free title?
No
Can a new owner applies for registration and title if there is a lien?
The DMV will receive the title certificate and the proof that the lien has been satisfied.
Can I transfer a title that has a lien listed?
You can transfer the title certificate and give the new owner the original proof that any lien listed on the title was satisfied.  Keep a copy of the proof for your records.
Has the new owner tried to process a title?
Yes.