This suddenly happened to my win 11 entra id hybrid machine in Feb 2025. I don't know why--I found no applocker, SRP or WDAC policies, though it was acting like one was applied--I also could not run batch files.

To fix, I had to create a default policy in Local Security Policy under Software Restriction Policies. I just left the Security Levels at the default "unrestricted" and this fixed things after a reboot.