Windows Subscription Activation not working

Question

Hi, We are moving from windows onprem licensing to M365 subscription type licenses. We have setup a test group to see how our current Windows computers are behaving with the new licenses. For some reason the M365 E5 Windows enterprise subscription is not reaching the target users and computers at all. Previously we have used KMS activation for CO-Managed computers and MAK activation for autopilot enrolled computers (hybrid joined). After assigning the licenses from Entra portal, the autopilot enrolled computers stay with the MAK activation as before, and the co-managed computers hold on to the KMS activation.

I’ve tried to clean up the KMS license and manually activating the OEM win pro license on one of the computers, but the OS stays as Win 11 Pro (activated with digital license). Also, the MAK activated intune enrolled computer has been cleaned from the MAK key with slrmgr /upk command, but it still didn’t receive the new subscription license.

Things that have been done so far:

1. Making sure that the licenses are assigned to selected users and don’t conflict with other licensing plans. 2. Checked that Azure join is working on the target computers: dsregcmd /status 3. Tried resetting to OEM provided Win Pro license with this Microsoft offered powershell command: $(Get-WmiObject SoftwareLicensingService).OA3xOriginalProductKey | foreach{ if ( $null -ne $_ ) { Write-Host "Installing"$;changepk.exe /Productkey $ } else { Write-Host "No key present" } } 4. Excluding the store app for business from cloud apps MFA conditional access policy as described in this article: https://learn.microsoft.com/en-us/windows/deployment/windows-subscription-activation 5. Made sure that the policy: Do not connect to any Windows Update Internet location is set to: Disabled and the corresponding reg dword value as stated here: https://learn.microsoft.com/en-us/windows/deployment/deploy-enterprise-licenses?pivots=windows-11 6. Made sure that we are using entra synced accounts by logging in with @domain.com credentials. 7. Tried this command to reset the licensing rundll32 clipc.dll,ClipCleanUpState

Windows versions are 22H2 and 23H2.

What would you suggest next? Any advice to resolve this issue would be appreciated.