I would suggest you to restart all of the Remote Desktop Services and check if anything changes.
If the issue still persists, please check if there's any GPO enabling FIPS compliant algorithms.
Navigate to Computer Configuration -> Windows Settings -> Security Settings -> Local Policies -> Security Options -> System Cryptography: Use FIPS compliant algorithms for encryption, hashing, and signing
And if the option System Cryptography: Use FIPS compliant algorithms for encryption, hashing, and signing is Enabled try to Disable it, then perform gpupdate /force, then restart the Remote Desktop Services again and try to connect.
If still not connecting, recheck that the option System Cryptography: Use FIPS compliant algorithms for encryption, hashing, and signing is still disabled, and I would suggest to navigate to Computer Configuration ->Administrative Templates -> Windows Components -> Remote Desktop Services -> Remote Desktop Session Host -> Security -> Require use of specific security layer for remote (RDP) connection enable the policy and select from Security Layer option RDP, then gpupdate /force, restart the Remote Desktop Services and try to connect.
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