Hello Nikhil Satheesan,
Thank you for posting in Q&A forum.
The Store password using reversible encryption policy setting is disabled by default, even if you did not configure it.
Please check if AD replication works fine if you have more than one DCs in the domain.
Run commands below on PDC to check.
repadmin /showrepl >C:\rep1.txt
repadmin /replsum >C:\rep2.txt
repadmin /showrepl * /csv >c:\repsum.csv
Please check if you have configured FGPP in your domain and apply FGPP to some user.
FGPP takes precedence over the default domain password policy.
Step-by-Step: Enabling and Using Fine-Grained Password Policies in AD.
I hope the information above is helpful.
If you have any question or concern, please feel free to let us know.
Best Regards,
Daisy Zhou