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Hi Prateek,
Thank you for your detailed sharing.
Since you mentioned that "Microsoft Support has already investigated the issue, including Tier 2 escalation and consultation with Microsoft engineering.", does that mean you have created a support ticket and contacted a support agent?
If that's the case, please actively keep in touch with the support agent as he/she can initiate a remote session, review backend settings, and possess the expertise to perform in-depth troubleshooting and provide appropriate solutions.
If you haven't submitted a support ticket, please refer to: Get support - Microsoft 365 admin | Microsoft Learn for detailed guidance on how to open a support ticket with Microsoft Support.
Please understand that this is a user-to-user community forum. I as a sole user here don't have access to your environment or Microsoft's backend systems, so I can only provide guidance based on public documentation and community experience. In this case, the best next step is to create a Support Ticket directly to Microsoft Support and request advanced assistance from the support agent.
Hope you're able to get this resolved soon.