How do I get SQL Authentication to work on Dynamics BC v21

The

I am currently trying to setup SQL Authentication for Business Central I am running a three-tier architecture as below
- APP Server - running BC v21(Installed all components except SQL components)
- DB Server - running MSSQL Server 2022 (Installed only SQL Components)
All the servers are running windows 2022 NON-DOMAIN JOINED

I have restored a DB (MyNavDB) and created an sql account (bcsvc) and a password
I have created a BC instance via powershell as the GUI Admin tool was discontinued with v21 of BC.
I have made all necessary setting with DB connection and also ran a test tool (.udl) file to test connection to the SQL Server from the Application Server.

I ran the following scripts to create a new key and import is as it's needed to enable SQL Authentication in this case
- New-NAVEncryptionKey -KeyPath "C:\Keys\nav.key" -Password (Get-Credential).Password
- Import-NAVEncryptionKey -ServerInstance BC -KeyPath "C:\Keys\nav.key" -ApplicationDatabaseServer MyNavSQLServer\MyNAV -ApplicationDatabaseName MyNavDB -Password (Get-Credential).Password
The account i used is for the sql account and it's password (created the account for sql authentication)

I ran into the following error when trying to import the key



What am I missing here I have tried all the solutions provided but non has been successful.