I am unable to sign in to a Sandbox Apple Account, where this issue occurs only via Simulator.
Under Settings > Developer, I tap "Sign In" under Sandbox Apple Account. I enter my account credentials, and after bringing me back to the Developer page, the Sign In button briefly appears as disabled, before being re-enabled, without signing in to the account. (The account credentials are also recognized as correct, as I will receive an alert popup if incorrect.) See screenshots below:
After signing in, Sign In button appears disabled...
... then is re-enabled without actually signing in to the account.
I have now tried setting up multiple sandbox accounts via App Store Connect with various permutations (no confirmation of Apple Account email, confirming Apple Account email, logging in to iCloud and accepting terms of service), running different device simulators, running simulators on different Mac computers... none of which yield a different result.
By contrast, I can sign in to the Sandbox Apple Account without issue on a physical device. The problem occurs only via Simulator.