Hello Jordan Hoff
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: Intune app protection policies blocking from creating a passkey in Microsoft Authenticator
Solution: Resolved by @Jordan Hoff
"After changing the Conditional Access Policy from All apps to a select few applications and after 24 hours of that change, then you're able to create passkey for users."
If you have any other questions or are still running into more issues, please let me know. Thank you again for your time and patience throughout this issue.
Please remember to "Accept Answer" if any answer/reply helped, so that others in the community facing similar issues can easily find the solution.
If this answers your query, do click `Accept Answer`
and `Yes`
.