Hi @Shreyal Gelani
Apologies for delay in response.
Could you please confirm how you setup your user flow and which option you choose for user's email accounts?
Currently, in Microsoft External Id for Customers (CIAM) we do not have an option to sign in with UserPrincipalName. Could you please confirm and share the screenshots so we can help you further.
We recommend to use Email with Password to Sign in to your application with MFA as MFA uses pass code as second form of authentication.
Reference - https://learn.microsoft.com/en-us/entra/external-id/customers/how-to-multifactor-authentication-customers
Thanks, Shweta