Hi All, Please find the workaround/solution for this problem.
Login to Azure Devops > Click on Organizaiton Settings
on LHS Menu > Under Security
Click on Polices
On the Polices page, make the below setting should enabled or ON, see the below screen shot.
After you enable the below setting, now try to create the new project using azure demo generator, it should be created
After you enable the below setting, now try to create the new project using azure demo generator, it should be created and should like below, I created multiple projects all are created successfully using demo generator.
Please provide like/comment if this solution works for you.