abhisk @riddhi2311 @HSclavon
I can confirm that using the BasicAuthToOAuthConversion Endpoint with credentials does NOT work anymore after the change went live for a customer's tenant last week.
In our .NET code we were able to mitigate this issue by setting up an app registration as described https://learn.microsoft.com/en-us/powershell/exchange/app-only-auth-powershell-v2?view=exchange-ps#step-1-register-the-application-in-azure-ad and use it to obtain a token i.e. via MSAL.NET and then pass the token as the password in the format "Bearer [AccessToken]" to the BasicAuthToOAuthConversion Endpoint.
A powershell sample can be found https://learn.microsoft.com/en-us/answers/questions/451006/pssession-and-modern-auth.html