Windows 365 Enterprise Cloud PC Connection Fails - VM Unavailable (Code 10012)

We are facing a critical and persistent connection failure for a Windows 365 Enterprise Cloud PC that appears to be stuck in a state where the VM is not available to the RDP client.

Provisioning Policy Configuration:
- Cloud PC Type: Windows 365 Enterprise
- Experience: Access a full Cloud PC desktop
- Use Microsoft Entra single sign-on: Yes
- Join type: Microsoft Entra Join
- Geography: Canada
- Region: Automatic (Recommended)
- Network: Microsoft hosted network
- Current MDM -Microsoft Intune

Checked logs and found that the RDP client connection attempts consistently failing with same error, 
Disconnected: reason = 10012
[Telemetry :: Event] Type: RDPClient Details: DisconnectReason
Subdetails: SessionHostResourceNotAvailable Code: 10012

Troubleshooting steps taken so far:
- Restarted the Cloud PC.
- Initiated a Reprovision action.
- Tried web version but that didn't help either.

Since simple restarts and reprovisions have failed to resolve the SessionHostResourceNotAvailable (10012) error, the current VM instance is unusable. Any guidance on resolving this definitive Code 10012 error is highly appreciated.