The Dynamic Lock checkbox in Settings is controlled by the Windows Hello for Business “Configure dynamic lock factors” policy.
In Group Policy, this setting is located at:
Computer Configuration → Administrative Templates → Windows Components → Windows Hello for Business → Configure dynamic lock factors
When this GPO is enabled and configured (or disabled by policy), it will manage Dynamic Lock behavior and can cause the UI option in Settings > Accounts > Sign-in options to be greyed out with “This option is managed by your organization.”
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