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Hi @Anandha Raj
Welcome to Microsoft Q&A forum
I’m so sorry to hear that you’re encountering the issue when activate Microsoft Office 365.
Regarding your description, The error "AADSTS500061: Symmetric Key Derivation Function version 'KDFv1' is invalid" indicates that your device is using an outdated KDFv1 algorithm, which Microsoft has removed due to a security vulnerability. This affects devices with Windows builds prior to July 2021 that lack the required security patch. Please refer this link for more information: Security update to remove support for KDFv1 algorithm for authentication - Microsoft Entra ID | Microsoft Learn
In the meantime, I suggest some steps you can try:
1.Check for Windows Updates:
-Open the "Settings" app on your Windows device.
-Navigate to "Update & Security" > "Windows Update."
-Click "Check for updates" and install any available updates
2.Restart the Device
3.Attempt to Sign In Again
4.Clear App or Browser Data:
-If using the Microsoft 365 app, clear its cache via the app settings.
-If using a browser, clear the cache and cookies
5.Update related Microsoft app
-Open "Microsoft Store" from the Start menu.
-Click the three-dot menu (⋯) > "Downloads and updates" > "Get updates."
-Update the Microsoft 365 app if listed
Additionally, if possible, please contact your Global Admin to verify Microsoft Entra (Azure AD) device registration and authentication logs following the updates to ensure everything is compliant. The following steps are recommended:
-Monitor Authentication Failures: Regularly check the Microsoft Entra sign-in logs for the error code 5000611 and the corresponding failure reason.
-Update Devices: If users report authentication failures with an error message referencing the KDFv1 algorithm, update their devices with the latest security updates for their Windows version.
-Search for Impacted Builds: Use the guidance provided in CVE Record CVE-2021-33781 to search for Windows devices within your tenant that might be running impacted builds.
-Communicate with Users: Inform users about the importance of keeping their devices updated and provide instructions on how to apply necessary updates.
Note: If you’re unsure who the Global Admin is within your organization, you can find guidance on locating them here: How do I find my Microsoft 365 admin? - Microsoft Support.
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