If your local machine registered via Azure Arc meets the requirements for Azure ML supported compute instances, try to ensure that it's registered as a compatible VM type rather than directly as a Microsoft.HybridCompute/machines
resource.
Another option is to use an Azure Arc-enabled Kubernetes cluster, which can serve as a compute target for Azure ML. This approach is more suited if you are working with containerized workloads and want to use local resources for training.
If there is a need to use the local machine as a compute target, a custom script may be required to create the connection between Azure ML Studio and the machine through a more manual process. This isn't natively supported but can involve using Azure CLI or REST APIs to manage compute connections.