I was able to replicate the error that you are receiving when setting up the phone provider configuration inside the SMS Passwordless configuration.
Could you please try to set up Twilio under Branding → Phone Provider and set it up either under Twilio or a Custom Phone Provider? Once you have done so, under the SMS Passwordless configuration, enable Use Tenant-Level Messaging Provider.
Let me know if that fixes the issue!
Kind Regards,
Nik