We are using this policy and we did extensive testing before deploying in our environment. Here are my experience and understanding
- We have to satisfy MFA once for Office applications(which one user click first) and rest office applications do not prompt for MFA.
- However, non office applications, which do not use PRT, still prompt for MFA.
- It works very different for mobile devices, every application on mobile prompt for MFA and we decided to exclude MFA policy for Mobile as it was very annoying.
So, the symptoms you described, on your HAADJ device, is unexpected.