Thank you for reaching out Microsoft Q&A.
It sounds like you've taken several essential steps to configure and troubleshoot access to your Entra ID-joined VM, but the issue is still persisting.
Please review the following points from the troubleshooting document and ensure they are aligned with your setup:
If you've configured a legacy per-user Enabled/Enforced Microsoft Entra multifactor authentication setting and you see the error above, you can resolve the problem by removing the per-user MFA setting. For more information, see the article Enable per-user Microsoft Entra multifactor authentication to secure sign-in events. If you haven't deployed Windows Hello for Business and if that isn't an option for now, you can configure a Conditional Access policy that excludes the Microsoft Azure Windows Virtual Machine Sign-in app from the list of cloud apps that require MFA. To learn more about Windows Hello for Business, see Windows Hello for Business overview.
Follow the document for trouble shoot guide: The sign-in method your trying to use isn't allowed. Try a different sign-in method or contact your adminstrator.
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