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SQL Authentication issue dynamics business central v21

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I am currently trying to setup SQL Authentication for Business Central I am running a three-tier architecture as below
- APP Server - running BC v21(Installed all components except SQL components)
- DB Server - running MSSQL Server 2022 (Installed only SQL Components)
All the servers are running windows 2022 NON-DOMAIN JOINED

I have restored a DB (MyNavDB) and created an sql account (bcsvc) and a password
I have created a BC instance via powershell as the GUI Admin tool was discontinued with v21 of BC.
I have made all necessary setting with DB connection and also ran a test tool (.udl) file to test connection to the SQL Server from the Application Server.

I ran the following scripts to create a new key and import is as it's needed to enable SQL Authentication in this case
- New-NAVEncryptionKey -KeyPath /C://Keys/av.key/ -Password (Get-Credential).Password
- Import-NAVEncryptionKey -ServerInstance BC -KeyPath /C://Keys/av.key/ -ApplicationDatabaseServer MyNavSQLServer//MyNAV -ApplicationDatabaseName MyNavDB -Password (Get-Credential).Password

The account i used is for the sql account and it's password (created the account for sql authentication)

I ran into the following error when trying to import the key
 
//


What am I missing here I have tried all the solutions provided but non has been successful.
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