Believe I finally found a solution to this issue. Turns out the TPM 2.0 sub-version 1.16 or less has an issue with the rsa_pss_rsae_sha256 cipher which is getting negotiated during a Remote Desktop connection with an Entra account. Disabling the RSAE-PSS ciphers in the registry allows the client to negotiate a rsa_pkcs1_sha256 connection successfully instead. Updating the TPM firmware on the system should also work, but is much more impactful and requires BitLocker suspension and clearing the TPM, etc...
For anyone running into this issue, you can remove these:
- RSAE-PSS/SHA256
- RSAE-PSS/SHA384
- RSAE-PSS/SHA512
from the registry key:
- HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Cryptography\Configuration\Local\SSL\00010003
and reboot.
Finally found a useful log entry pointing to this issue in the Microsft-Windows-Crypt-NCrypt-Operational event log.
- 0x40290423 (The requested salt size for signing with RSAPSS does not match what the TPM uses)