Hi, We have identified this issue is because of the proxy.
We have submitted the fiddler logs to the Microsoft support team, and they found 401 right after the Kerberos ticket being sent during the authentication flow. Based on the research, they have suggested bypassing the proxy for one of the failing devices.
Bypassing the proxy along with SSL bypass for the URL https://autologon.microsoftazuread-sso.com fixed the issue.
i.e. able to access the office365 recourses just bypassing the username/UPN and without any password prompt.
@JamesTran-MSF, Thankyou for all your help.