This Mac can't connect to iCloud because of a problem with "abcdefg@companydomain.com"

Hello 👋

We have been running into some issues lately with different company-managed machines, here are all the details and hopefully someone has run into the same and had a way to fix it.

1. We use Mosyle MDM to manage our machines and also use Mosyle Auth2 for login on these machines
2. Lateley, we've gotten quite a few users unable to sign in and luckily we have their Filevault keys escrowed, we guide them on the password reset options using the MacOS recovery option either through their iCloud if they have that setup or through Recovey Key > Terminal > ResetPassword
3. They reset their password, sign back in to their computer and then the following issues stats

OVERALL ISSUES THE USERS GET

1. User gets completely logged out of iCloud and their saved fingerprint gets removed
2. They get prompted with the following pop up window (image attached) to which they click Apple ID settings > get prompted to sign in but won't do anything, won't load etc
3. They go to Apple ID main setting under system preferences > sign out and some get stuck others do allow full logout, but even those can do a full logout can't sign back in, they get no errors they simply start a loop of email, password and then blank.

WHAT WE'VE TRIED/TESTED

1. Restarted laptop, entered safemode, no luck, same issue.
2. Removed icloud related info from keychain, same issue.
3. Contacted Mosyle/MDM and they claimed/confirmed nothing is blocking icloud login, this also makes sense as no one besides users who reset their passwords are having this issue

I have yet to try and device wipe as users are not willing to try this yet but was hoping for an easier fix, I also tried contacting Apple directly and they always say the same which is that they can't do much about managed devices and that the issue most likely relies on the MDM, which isn't true.