Unable to disable Microsoft Entra-only authentication on SQL Managed Instance. Met with InvalidParameterValue error

We are unable to disable Microsoft Entra-only authentication on a SQL Managed Instance.

Behavior: The API accepts the PUT request (HTTP 202 Accepted) but the async operation fails with: 

{"code":"InvalidParameterValue","message":"Invalid value given for parameter AzureADOnlyAuthentication. Specify a valid parameter value."}

Request payload:

{"properties":{"azureADOnlyAuthentication":false}}

Current state:

• Entra-only authentication is currently true (confirmed via az sql mi ad-only-auth get)   
• SQL administrator login exists (MI was originally created with SQL auth)    
• Microsoft Entra admin is configured

Methods attempted (all produce the same or more generic error):

1. Azure Portal:

2. az cli:

az sql mi ad-only-auth disable --resource-group "<rg>" --name "<sqlmi>"                               
(InvalidParameterValue) Invalid value given for parameter AzureADOnlyAuthentication. Specify a valid parameter value.
Code: InvalidParameterValue
Message: Invalid value given for parameter AzureADOnlyAuthentication. Specify a valid parameter value.

What we ruled out:

• Azure Policy: No policy assignments targeting SQL resources at subscription or RG level. No deny actions logged in activity log.    
• Resource locks: None on the MI    
• Missing SQL admin: administratorLogin is set    
• Missing Entra admin: Microsoft Entra admin is configured    

Additional context:

Activity log shows 15+ consistent failures over the past 24 hours, all with the same InvalidParameterValue error    

Correlation IDs are available upon request

Ask: Please investigate the failure. The server accepts the request but fails during processing with a generic error that provides no actionable detail. We need Entra-only authentication disabled to rollback our service deployment which initially enabled it.