Teams Warning - Device doesn't support WVD optimization

Okay, we are talking about two different things. Your Windows 365 Cloud PC is already setup for Teams video optimization. The instructions you posted were from Azure Virtual Desktop and following those instructions can break the optimization on your Windows 365 setup. (Personal experience unfortunately.)

What is Teams optimization? Watch first few min of this video for explanation, but do not follow their setup instructions as it is for Azure Virtual Desktop: https://www.youtube.com/watch?v=RfbolIgPcBY

Teams optimization requires two components to work:
1: a configured host Cloud PC, which Windows 365 is already configured.
2: connecting to Windows 365 from a Teams optimized Remote Desktop client app.

The Remote Desktop app on the computer you use to connect to Windows 365 has certain requirements to support Teams Optimization.
Web: Does not support A/V optimization
If on a PC: you must download the app from the following link, not the Microsoft Store. https://docs.microsoft.com/en-us/windows-server/remote/remote-desktop-services/clients/windowsdesktop
If on a Mac: You must install latest version from App Store, Go to preferences and put a check to enable Teams optimization preview.

If you installed any apps on the Windows 365 Cloud PC from the AVD link you posted, you will prob have to reset the W365 PC to get Teams optimizations to work correctly as it broke the configuration. But if you are not using a supported client to connect to W365, try resolving that first.

Does that help?