The issue happens because the AD policy "LAN Manager Authentication Level" is set to "Send LM & NTLM response" by default.

To resolve the issue, change it to "Send LM & NTLM - use NTLMv2 session security if negotiated".

1. Open the Group Policy Management.
2. Navigate to Forest name > Domains > Domain name of the Group Policy object (GPO) that you want to edit, and then double-click Group Policy Objects.
3. Right-click the GPO, and then click Edit.
4. On the Group Policy Object Editor console, go to the computer's Configuration > Windows Settings > Security Settings.
5. Click Local Policies and select Security Options.
6. Set the "LAN Manager Authentication Level" to Send LM & NTLM - use NTLMv2 session security if negotiated.