I'm glad that you were able to resolve your issue and thank you for posting your solution so that others experiencing the same thing can easily reference this! Since the Microsoft Q&A community has a policy that "The question author cannot accept their own answer. They can only accept answers by others ", I'll repost your solution in case you'd like to "Accept " the answer.
Issue: Monitoring On-premises servers using Azure monitor
Solution:
The issue occurred because Azure Arc private endpoints created private DNS zones incompatible with our custom DNS server, and traffic was also blocked by an internal SD-WAN device; it was resolved by updating DNS records on the custom server and unblocking the traffic
Please remember to "Accept Answer" if any answer/reply helped, so that others in the community facing similar issues can easily find the solution.
Accept answers on Microsoft Q&A | Microsoft Learn
An accepted answer is the answer that the person who asked the question chooses as the one they think best solves their problem.