Hello,
This issue is may caused by Encryption methods, you can try to disable NLA for a workaround.
a. Open gpedit.msc applet.
b. Navigate to Computer Configuration -> Administrative Templates -> Windows Components -> Remote Desktop Services -> Remote Desktop Session Host -> Security.
c. Enable Require use of specific security layer for remote (RDP) connections and select RDP as Security Layer.
Disable Require user authentication for remote connections by using Network Level Authentication policy.
Reboot Terminal server.
d. Navigate to Computer Configuration -> Administrative Templates -> Windows Components -> Remote Desktop Services -> Require use of specific security layer for remote (RDP) connections
e. Choose RDP layer and save.
Then the authentication will occur on terminal server.
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