We did get it working to a fashion with excluding the synching all users from Azure setting. Still to run the pilot with staff and students right enough and our testing has indicated that it is working.
As an extra step for us (administrators) where we had to go through Microsoft Integration > Advanced > Manage Teams connection and 'Connect' the Moodle courses individually.
We also do not want all our Moodle courses to be connected to Teams. We have a course programme with say ten or so modules (Moodle courses) and we have created a Moodle Course Information Page for the programme where we will add the LTI Teams integration. One Programme, one MS Teams instance in which will only be used to communicate with our College Apprentices and the Work Based Learning teaching staff. Moodle for learning, teaching and assessment and the Teams aspect for communication and collaboration.
Hope the above helps.
Ali