Thank you for reaching out.
I understand you are facing issues with your Application gateway V2 and NTLM authentication.
The reason of the behavior observed being NTLM authentication isn't supported by Application Gateway V2. This is currently documented in the limitation section here
The recommended solution in this case is to update authentication method instead. It will also help if you could upvote this feedback item for this request on our feedback portal.
If it helps you can also go through this blog post on how the windows team is reducing dependencies on NTLM.
Hope this helps! Please let me know if you have any additional questions. Thank you!