Hello Handian,
NPS can’t be configured to “drop” requests instead of sending a reject by design, RADIUS servers must reply with either Access‑Accept or Access‑Reject. There’s no supported way to make NPS silently ignore invalid users. If you want Cisco to fall back to local accounts even when the username isn’t in AD, you’ll need to adjust the device’s AAA method list. Set RADIUS as the first method and local as the second, but allow reject responses to still trigger the local fallback. In Cisco IOS, this is done by configuring aaa authentication login default group radius local so that if RADIUS rejects or is unreachable, the device will check the local database. The change has to be on the Cisco side - NPS cannot be modified to “drop” instead of “reject.”
I really hope it's helpful to you!
Harry.