Fail to create Flex Consumption Function App due to invalid managed workspace linkage for Application Insights

[v-ruizh]

OS: Win 11 x64
Build Version: 20260623.1

Repro Steps:

1. Create a basic Python function app with "Managed Identity" resource authentication type selected.
2. Check whether succeeds to create the function app or not.

Expect:
Succeed to create the function app.

Actual:
Fail to create the function app. (This issue occurs intermittently and seems related to backend resource selection logic for Application Insights and managed workspace.)

11:10:01 AM: Successfully created resource group "serenepy314test".
11:10:02 AM: Creating user-assigned identity "serenepy314test-identities-3fa2e9"...
11:10:07 AM: Successfully created user-assigned identity "serenepy314test-identities-3fa2e9".
11:10:32 AM: Successfully created app service plan "FLEX-serene-py314-test-c397".
11:10:32 AM: Creating storage account "serenepy314test" with sku "Standard_LRS"...
11:10:59 AM: Successfully created storage account "serenepy314test" with sku "Standard_LRS".
11:11:02 AM: Verifying that Application Insights is available for this location...
11:11:08 AM: Failed to create application insights "serenepy314test"
11:11:08 AM: Error: The workspace /subscriptions/a97e7905-2353-4cbe-8941-7358a40eaf11/resourceGroups/ai_serenepyconb_4b6d862c-d03c-4ae8-8c70-03033b954f61_managed/providers/Microsoft.OperationalInsights/workspaces/managed-serenepyconb-ws is part of a resource group that's managed by a different Application Insights resource, and cannot be linked with this Application Insights component.

More Info:
This issue is not consistently reproducible. It occurs intermittently when creating Function Apps under similar conditions.

[motm32]

Is there an application insight resource that already exists with the same name ("serenepy314test")?

[v-ruizh]

Is there an application insight resource that already exists with the same name ("serenepy314test")?

I checked and there isn't an existing Application Insights resource named "serenepy314test".

Unfortunately, I haven't been able to identify reliable repro steps for this issue. It only occurred twice during my testing, and subsequent attempts to create the same Flex Function App completed successfully.

What stood out is that the error referenced resources associated with a previously created Function App (serenepyconb), even though the Function App being created was serenepy314test.

I'll keep an eye out for it during future testing and share any additional information if I can reproduce it again.