Image classification & Object detection: Cannot create a new workspace for Azure environment.

Start with the reported Azure workspace creation flow, then read AzureResourceManager.cs around line 163 and NewWorkspaceDataContext.cs around line 136, where the failure is logged. Trace the storage-account creation request and verify the behavior against the Azure policy error. Done means the Image classification or Object detection Azure workspace can be created successfully under the reported environment.

System Information (please complete the following information):
Windows OS: Windows-11-Enterprise-24H2
ML.Net Model Builder 2022: 17.19.2.2522504 (Main Build)
Microsoft Visual Studio Enterprise: 2022(17.13.6)
.Net Core: 8.0,9.0

Describe the bug

• On which step of the process did you run into an issue:
  Cannot create a new workspace for Azure environment.

TestMatrix

To Reproduce
Steps to reproduce the behavior:

1. Select Create a new project from the Visual Studio start window.
2. Choose the C# Console App (.NET Core) project template.
3. Add model builder by right click on the project.
4. Select "Image classification or Object detection" scenario.
5. On the "Environment" page, choose "Azure" option and then click "Set up workspace" button.
6. Choose "ML.NET Model Builder Demo" subscription and then click "New Workspace" link.
7. Provide the name, regions, RG on the "Create new workspace" dialog, then click "Create" button.
8. Model Builder error occurs: Resource 'fullloctest02storageafh' was disallowed by policy. Reasons: 'This request was denied due to internal policy. Local authentication methods are not allowed.

Expected behavior
Workspace can be created successfully.

Screenshot:

Additional context:
2025-04-29 07:12:05.4294 DEBUG Resource 'fullloctest02storageafh' was disallowed by policy. Reasons: 'This request was denied due to internal policy. Local authentication methods are not allowed. For more information, refer to https://aka.ms/safesecretsstandard.'. See error details for policy resource IDs.
Status: 403 (Forbidden)
ErrorCode: RequestDisallowedByPolicy

Content:
{"error":{"code":"RequestDisallowedByPolicy","target":"fullloctest02storageafh","message":"Resource 'fullloctest02storageafh' was disallowed by policy. Reasons: 'This request was denied due to internal policy. Local authentication methods are not allowed. For more information, refer to https://aka.ms/safesecretsstandard.'. See error details for policy resource IDs.","additionalInfo":[{"type":"PolicyViolation","info":{"evaluationDetails":{"evaluatedExpressions":[{"result":"True","expressionKind":"Field","expression":"type","path":"type","expressionValue":"Microsoft.Storage/storageAccounts","targetValue":"Microsoft.Storage/storageAccounts","operator":"Equals"},{"result":"True","expressionKind":"Field","expression":"Microsoft.Storage/storageAccounts/allowSharedKeyAccess","path":"properties.allowSharedKeyAccess","expressionValue":"******","targetValue":"false","operator":"Exists"},{"result":"True","expressionKind":"Field","expression":"tags[Az.Sec.DisableLocalAuth.Storage::Skip]","path":"tags[Az.Sec.DisableLocalAuth.Storage::Skip]","targetValue":"false","operator":"Exists"},{"result":"True","expressionKind":"Value","expression":"[contains(resourceGroup().tags, parameters('skipTagName'))]","expressionValue":false,"targetValue":"false","operator":"Equals"},{"result":"True","expressionKind":"Value","expression":"[contains(subscription().tags, parameters('skipTagName'))]","expressionValue":false,"targetValue":"false","operator":"Equals"},{"result":"True","expressionKind":"Value","expression":"all_regions","expressionValue":"all_regions","targetValue":["all_regions"],"operator":"In"}],"reason":"This request was denied due to internal policy. Local authentication methods are not allowed. For more information, refer to https://aka.ms/safesecretsstandard."},"policyDefinitionId":"/providers/Microsoft.Management/managementGroups/CnAIOrchestrationServicePublicCorpprod/providers/Microsoft.Authorization/policyDefinitions/8e7a35ba-088b-4288-9dd0-c01bbecdcdbc-1.0","policyDefinitionName":"8e7a35ba-088b-4288-9dd0-c01bbecdcdbc-1.0","policyDefinitionDisplayName":"Azure Storage Policy to disable local auth - Opt In-1.0","policyDefinitionVersion":"1.0.0","policyDefinitionEffect":"deny","policyAssignmentId":"/providers/Microsoft.Management/managementGroups/CnAIOrchestrationServicePublicCorpprod/providers/Microsoft.Authorization/policyAssignments/SafeSec-Strg-OptIn-V1-0","policyAssignmentName":"SafeSec-Strg-OptIn-V1-0","policyAssignmentDisplayName":"Azure Storage Policy to disable local auth - Opt In-1.0","policyAssignmentScope":"/providers/Microsoft.Management/managementGroups/CnAIOrchestrationServicePublicCorpprod","policyAssignmentParameters":{"heavyRegions":["eastus"],"pilotRegions":["westcentralus","eastasia"],"effect":"deny","mediumRegions":["uksouth"],"canaryRegions":["centraluseuap","eastus2euap"],"regionCodeMapping":{"uaecentral":"auh","eastasia":"hk","japaneast":"ty","southcentralus":"sn","westus3":"usw3","eastus2euap":"cbn","canadaeast":"yq","australiasoutheast":"ml","uksouth":"ln","australiacentral2":"cbr2","southeastus":"usse1","jioindiacentral":"jinc","westcentralus":"cy","australiacentral":"cbr","centraluseuap":"cdm","norwayeast":"noe","northeurope":"db","brazilnortheast":"brne","brazilsouth":"cq","apacsoutheast2":"kul","italynorth":"itn","eastusslv":"use","malaysiasouth":"mys","australiaeast":"sy","centralindia":"pn","koreacentral":"se","malaysiawest":"myw","southafricawest":"cpt","francesouth":"mrs","westindia":"bm","eastus2":"bn","koreasouth":"ps","switzerlandnorth":"chn","israelcentral":"ilc","eastus":"bl","southcentralusstg":"ustsc","ukwest":"cw","swedensouth":"ses","uaenorth":"dxb","qatarcentral":"qac","brazilsoutheast":"brse","westus":"by","mexicocentral":"mxc","spaincentral":"esc","southafricanorth":"jnb","germanynorth":"den","germanywestcentral":"dewc","chilecentral":"clc","southeastasia":"sg","norwaywest":"now","koreasouth2":"krs2","jioindiawest":"jinw","westeurope":"am","taiwannorth":"twn","westus2":"mwh","northcentralus":"ch","taiwannorthwest":"twnw","newzealandnorth":"nzn","francecentral":"par","japanwest":"os","southindia":"ma","polandcentral":"plc","eastusstg":"uste","switzerlandwest":"chw","canadacentral":"yt","swedencentral":"sec","centralus":"dm","disabled":"."}},"policyExemptionIds":[],"policyEnrollmentIds":[]}}]}}

Headers:
Pragma: no-cache
x-ms-failure-cause: REDACTED
x-ms-request-id: ac5f458e-3aa1-4708-9164-a5ec802dd969
x-ms-correlation-request-id: REDACTED
x-ms-routing-request-id: REDACTED
Strict-Transport-Security: REDACTED
X-Content-Type-Options: REDACTED
X-Cache: REDACTED
X-MSEdge-Ref: REDACTED
Content-Length: 4301
Cache-Control: no-cache
Content-Type: application/json; charset=utf-8
Date: Tue, 29 Apr 2025 07:12:04 GMT
Expires: -1

at Azure.ResourceManager.Storage.StorageAccountsRestOperations.d__9.MoveNext()
--- End of stack trace from previous location where exception was thrown ---
at System.Runtime.ExceptionServices.ExceptionDispatchInfo.Throw()
at System.Runtime.CompilerServices.TaskAwaiter.HandleNonSuccessAndDebuggerNotification(Task task)
at Azure.ResourceManager.Storage.StorageAccountCollection.d__5.MoveNext()
--- End of stack trace from previous location where exception was thrown ---
at System.Runtime.ExceptionServices.ExceptionDispatchInfo.Throw()
at System.Runtime.CompilerServices.TaskAwaiter.HandleNonSuccessAndDebuggerNotification(Task task)
at Microsoft.ML.ModelBuilder.RemoteResourceManager.AzureResourceManager.d__9.MoveNext() in //src/Microsoft.ML.ModelBuilder/RemoteResourceManager/AzureResourceManager.cs:line 163
--- End of stack trace from previous location where exception was thrown ---
at System.Runtime.ExceptionServices.ExceptionDispatchInfo.Throw()
at System.Runtime.CompilerServices.TaskAwaiter.HandleNonSuccessAndDebuggerNotification(Task task)
at Microsoft.ML.ModelBuilder.AzureAttach.NewWorkspaceDataContext.d__25.MoveNext() in //src/Microsoft.ML.ModelBuilder/AzureAttach/NewWorkspaceDataContext.cs:line 136 (Microsoft.ML.ModelBuilder.Utils.Logger.Debug)
2025-04-29 07:16:40.3162 DEBUG finalize EnvironmentViewModel_4 (Microsoft.ML.ModelBuilder.Utils.Logger.Debug)
2025-04-29 07:16:40.3162 DEBUG finalize TrainViewModel_13 (Microsoft.ML.ModelBuilder.Utils.Logger.Debug)