There are several potential causes for this error but usually one of the simplest things to check is if you have e-mail OTP enabled. If the Sonicwall device cannot send the OTP e-mail successfully, the error will appear.
You can test this by temporarily disabling OTP on one account and trying to log in. If the login works, that means that the OTP is the cause. Check the SMTP settings to make sure that Sonicwall can send e-mails successfully.