Hi @ medwds
Thank you for sharing your issue on Microsoft Q&A.
I Understand that you're experiencing challenges with Microsoft 365's multi-factor authentication setup, particularly regarding the use of SMS as a backup method alongside the Microsoft Authenticator app.
Please check if your tenant has the Authenticator app registered. If so, disable it and enable SMS-based authentication instead.
If users are enabled for SMS-based authentication, their phone number must be associated with their user profile in Microsoft Entra ID before they can sign in. Please verify if the users' phone numbers are correctly set in their accounts. If you are the global admin, you can set the phone numbers. At the sign-in prompt, enter the phone number associated with the user's account. Now the user can sign in without the need to provide a username or password.
Hope this helps. Do let us know if you have any further queries.
Best Regards.
Harshitha Eligeti.