Dear H Hanson,
Thank you for posting your query in our community.
Please don't worry, we will resolve your concern together and move towards a path to resolution.
According to my test, I got the same behavior as you mentioned. We believe when you click on "Sign in with a Microsoft account instead" it only accepts personal accounts which is why you get this error. if you want to add a local work or school account you have to set it up in Windows installation. This is not a bug or problem with your computer, this is the expected behavior of the Windows operating system.

- Here are some workarounds for you.
- Method 1
You can go to Settings -> Accounts -> access work or school account and sign up to your work account from here.


You have to reinstall the Windows system by going to this website( click here --->> Download Windows 11 (microsoft.com) >> downloading ISO >> making a USB bootable drive>> and Install windows completely.

When installation is complete go through the setup screen >> When you as to create a personal or work account select work account and use your work account credentials to logging to your laptop.
If you have any additional questions or need any additional help regarding this or anything else, please let me know, I'll be here to help.
And in the meantime, I hope you have a lovely day ahead, stay safe and take care!
Sincerely,
Sophia