Hi Azim,
Thank you for informing that the issue is resolved.
As an original poster cannot accept their own answer, I am reposting it so that you can accept it an answer. Accepted answer will help other community members navigate to the appropriate solutions.
Issue: SSO Not Functioning for MS Teams and OneDrive in Azure Virtual Desktop
Solution: My apologies for the delayed update, and thank you for sharing the suggestion. However, it isn't applicable to our issue, as SSO was not configured via GPO for our AVD VMs. At the time we reported the issue, we were using the latest version of FSLogix, and the problem encountered by users doesn't align with the third suggestion.
That said, we were able to resolve the issue by enabling the Roam Identity GPO. I’m attaching the relevant article here for reference:
https://learn.microsoft.com/en-us/fslogix/how-to-use-group-policy-templates
Thank you!