Yes, I am able to reproduce it reliably.
Manage --> Connections -> Linked Services --> New -->DataStore --> PostgreSQL --> and put in the settings for IR and Server name / pwd etc with the right encryption method.
Then when I hit on Test connection --> it says "successful" and then when I try to hit "Create" - its shows the above message (consistently every single time with this server)
There are many other connections set up this way with other servers that work perfectly fine - so I'm unable to figure out where I went wrong.
If you need other details, feel free to share an address. Thanks a million for your help Martin!
Regards,
Ramya