Hello,
Thank you for posting in Q&A forum.
To further troubleshoot this issue, please kindly try below steps:
1.Check if there's any wrong GPO configuration.
2.Meanwhile you can try editing the registry to disable the virtual smart card emulation in below path: HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\DeviceGuard\EnableVirtualizationBasedSecurity -> set the value to 02.
3.Ensure the group policy is up to date and applied to the machine.
To help other customers who may be facing the same issue, please don't forget to vote if the reply is helpful.
Best Regards
Zunhui