Fix: Regenerate secrets when Entra apps are recreated after manual deletion

[Copilot]

When Entra client applications are manually deleted and then azd up is run, the AZURE_SERVER_APP_SECRET and AZURE_CLIENT_APP_SECRET environment variables were not being regenerated, even though the applications were recreated. This caused authentication failures since the old secrets in the environment were invalid.

Root Cause

The create_or_update_application_with_secret function in scripts/auth_init.py only checked if the secret environment variable was missing, but didn't account for the scenario where:

1. Applications were deleted manually from Entra
2. Old secrets still existed in environment variables (but were now invalid)
3. New applications were created but used the old, invalid secrets

Solution

Modified the secret generation logic to also regenerate secrets when a new application is created:

# Before
if object_id and os.getenv(app_secret_env_var, "no-secret") == "no-secret":

# After  
if object_id and (os.getenv(app_secret_env_var, "no-secret") == "no-secret" or created_app):

This ensures secrets are regenerated when either:

• No secret exists in environment (preserves original behavior)
• A new application was created (fixes the issue)

Testing

Added comprehensive tests in tests/test_auth_init.py that validate:

• Secrets are regenerated when apps are recreated (fixes the reported issue)
• Secrets are NOT regenerated when both apps and secrets exist (preserves existing behavior)
• Secrets are generated when apps exist but no secrets exist (existing functionality)

The fix has been validated against the exact reproduction scenario described in the issue.

Fixes #2522.

Warning

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  • Triggering command: .venv/bin/python -m pytest tests/test_authenticationhelper.py::test_auth_setup -v (dns block)
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