M1 MacBook Air can’t create a new account

The screen will get stuck after the “create a computer account” screen for several minutes until I get an error message “Your computer account could not be created with the name and password specified. Please try again.” It will take about 7 minutes to get to this message.

If I shutdown the MacBook while it’s stuck, upon startup it will take me back to the login screen with password. When I enter the password I chose it will not not unlock. When I click on reset password using Apple ID, my Apple ID does not work.

I know i can tAke it back to the store but I’m trying to trouble shoot the issue rather than wait. Curious more than anything what the issue is. I have already tried reinstalling the OS