So it appears that not having set the Authentication requirements flags correctly was the root cause of my issue.

I haven't diagnosed if it is a requirement of Windows 11 or Bluetooth 5.3, but when the machine call to bond failed with a peripheral that set neither the Secure Connections and/or MITM protection flag. This on the surface seem to me like a bug in Windows if the call never returns, but I'm unsure.

Regardless if your here searching why this call isn't returning for you you can check these settings on your peripheral.