Hello @Sam Price,
Thank you for posting your query on Microsoft Q&A.
To log in to AVD using Microsoft Entra ID accounts, users must be part of the same directory. Currently, users invited through external identities, such as Microsoft Entra Business-to-Business (B2B) or Business-to-Consumer (B2C), are not supported. This is a known limitation.
The reason for this limitation is that in order to log into AVDs using Entra accounts, the virtual machine (VM) must be Azure-joined, specifically Microsoft Entra-joined. Only users created in your tenant can log into Entra-joined machines to achieve Single Sign-On (SSO) behavior. Guest or external accounts cannot log in to these Entra-joined machines, as their accounts are created in a different directory, while the device they are trying to access is enrolled in your directory.
This limitation is by design. For more details, please refer to the following documentation:
Known Limitations of Azure AD Joined Session Hosts
External Identity Authentication for AVD
I hope this information is helpful. Please feel free to reach out if you have any further questions.
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Thanks,
Raja Pothuraju.