Microsoft Entra login part of the macOS Platform SSO is failing.
Solution
Make sure the Office 365 password meets the macOS password policy by changing it in Office 365 or Active Directory.
Close the Microsoft Entra sign in screen to allow you to restart the process.
Navigate to Settings>>>Users and Groups>>>click Edit on Network Server and then click Register or Repair.
Enter the local account password, then log in with the new Office 365 password and once the Preparing the device… screen has completed and the Microsoft Entra login screen is presented, login with the new Office 365 password.
Once that goes through, then it means that the Office 365 password has synced with the local account.
You can now log into the Macbook computer with the Office 365 password.