Hello @Suraj3D and @Toney Biegalski (IS)
I don't know if you still have the issue, but hope this will anyway help.
I believe most of the time the so-called answer written here by "Microsoft" experts completely miss the sense of the issue, and anyway are not able to give a valid answer.
I faced the same problem by myself and found a solution that worked, at least for me.
I was in the same condition: just 1 administrative local account (VM not joint to a domain) and locked out because of continuous flood of login tries with wrong password.
Since this lockout happens based on login tries, regardless on how strong is the password set, I find very stupid to have the admin lockout policy enabled by default, and I disabled it as soon as I gained control back.
Anyway, from the Azure page of the VM expand the "Help" menu item group and select "Reset password".
If you read carefully, this page is not only usable to change the password of an existing account (which is useless in lockout condition) but can also CREATE and BRAND NEW Administrative account.
Just put an username, twice the password and that's it. Use the new account to logon an disable the lockout password using the local security policy applet.
Good luck and please mark my answer as valid if you find it useful.