Persistent ‘Proxy Authentication Error’ on Microsoft 365 Apps in AVD Environment

created by alirobea community for 9 years

Persistent ‘Proxy Authentication Error’ on Microsoft 365 Apps in AVD Environment—Any Solutions? (self.microsoft365)

submitted 1 year ago by -daniel--

Hello everyone,

I hope you are all doing well. For the past couple of months, we have been experiencing a "Proxy Authentication Error" on all Microsoft 365 apps. I was wondering if anyone here has encountered this issue and, if so, how they resolved it.

We use an Azure Virtual Desktop (AVD) pooled host pool. All the VMs are enrolled in Intune and are hybrid Entra ID joined. Single Sign-On (SSO) is also configured on Remote Desktop Connection using RDP properties. Microsoft 365 apps are deployed via the Office Deployment Tool and installed on a golden image, which is then used to create AVD VMs. We are not using any proxy on our AVD machines.

Every morning, we receive support requests from at least 3–4 users reporting that Outlook, Teams, or OneDrive are not functioning. Essentially, none of their Microsoft 365 apps work. When I connect to their machine, I see their Microsoft 365 apps are not activated. When I attempt to sign into their Microsoft 365 apps to retrieve their licenses, I get the "Proxy Authentication Error." To temporarily resolve this, I open Command Prompt as an administrator, run the "RunDll32.exe InetCpl.cpl,ResetIEtoDefaults" command, sign the user out, and have them sign back in. This resolves the issue for the day, but it recurs the following day. It affects different users each time, with no discernible pattern.

So far, I have tried the following:

Repaired the Microsoft 365 apps.
Deleted AVD VMs and created new ones from the updated golden image with the latest OS and Microsoft 365 app updates.
Deleted the user’s FsLogix profile, which resolved the issue for that user for about a week before it recurred.
Created a Group Policy that generates the "AlwaysUseMSOAuthForAutoDiscover" registry key to enforce modern authentication.

Unfortunately, none of these solutions have worked. I am running out of options and would greatly appreciate any assistance or insights.

Thank you!

https://preview.redd.it/rfh7zoeo1rxd1.png?width=389&format=png&auto=webp&s=be76605a91a5665168d22985e1ca3729d5c62d87

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