Hi Jaro,
The core obstacle you are facing is that automatic MDM enrollment is a feature of Entra ID Premium P1, while your current setup relies on Entra ID Free. Even though your users have Intune Plan 1 licenses, the automated handshake that links a device to Intune during a standard Entra Join is gated behind that identity license. Without the ability to modify the MDM User Scope in the portal, the system cannot automatically redirect the enrollment request to the Intune service.
To resolve this without upgrading your licenses, you must utilize manual MDM enrollment. Configuring CNAME records is the most effective way to simplify this for your users. You should create a CNAME record for enterpriseenrollment.[yourdomain.com] pointing to enterpriseenrollment.manageddevice.microsoft.com. This allows the Windows enrollment client to discover your Intune server using only a user's email address. Without this record, users would be prompted to manually enter the discovery URL, which is a common point of failure.
Instruct your users to navigate to the Access Work or School section in the Windows Settings app. They must specifically avoid the large Connect button, which defaults to an automated join process that will fail. Instead, they should select the link titled Enroll only in device management. This initiates a direct MDM enrollment that functions perfectly with Entra ID Free. Once successfully enrolled, you can verify the registration by checking the HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Enrollments registry key, where a unique GUID will be generated for the Intune management session. Alternatively, installing the Microsoft Company Portal app from the Microsoft Store provides a more intuitive interface for users to achieve this same manual registration.
Hope this answer brought you some useful information. If it did, please hit “accept answer”. Should you have any questions, feel free to leave a comment.
VP