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Sandbox User Creation Troubleshooting

I have a Salesforce Sales Cloud Production organization that utilizes SSO and a custom domain.

I want to create a Sandbox and create a new user within the sandbox. When I receive the Salesforce Automated Verification e-mail, the link redirects me to the login page with an error stating "your user name and password is not correct, please contact your administrator"
Any ideas on what may be the root of this problem?

To my knowledge, SSO and a custom domain should have no impact but I'm running out of ideas.

thoughts?