Hybrid Configuration Wizard Fails – MRSProxy Unauthorized

Issue: HCW8078 - Migration Endpoint could not be created
Details:
MRSProxy connection to https://mail.domain.ca/EWS/mrsproxy.svc failed.
Error: The HTTP request is unauthorized with client authentication scheme 'Negotiate'. The authentication header received from the server was 'Basic realm="mail.domain.ca"'.

We’ve confirmed:

MRSProxy is enabled
Basic Auth is enabled
Virtual directories (EWS, Autodiscover, RPC) have correct auth settings
Outlook clients began prompting unexpectedly after configuration changes

Looking for advice on resolving this auth issue during Hybrid Configuration Wizard setup.