On 1st January 2023 Microsoft implemented a change so that new Exchange Online tenants by default no longer allow creating inbound connectors.
If you selected the option to use server-side signatures in Signature 365, the setup wizard will fail with the following error:
To resolve this problem you need to open a new support ticket with Microsoft Support in your Microsoft 365 admin center.
Inform Microsoft Support that you are setting up an email signature solution, Signature 365, which requires an inbound connector to be created in your tenant.
The Signature 365 setup wizard executes the following PowerShell command:
It is this PowerShell command that fails with this error:
Request Microsoft Support to enable the ability to create inbound connectors of type OnPremises in your Exchange Online tenant.
When completed run the Signature 365 setup wizard again to finalise setup.