Hi asyriala,
You’re correct that this is a known bug. If IdP-initiated logins were enabled for your connection, you would get a slightly different error, as described here:
I call it “changing horses in midstream”, and it’s probably encountered most frequently when folks use the “try” button in the dashboard when the connection was configured with a custom domain. I’m glad you were able to find the cause of the problem, and I’m sorry the dashboard isn’t able to handle this situation more gracefully.