OpenShift installation on Azure fails with proxy not able populate private internal DNS

OpenShift installation on Azure fails with proxy not able populate private internal DNS
When installing OCP the machine-config cluster operator is not successful and complains with following message:
Error:
~~~ 
Message: Node master-0 is reporting: "unexpected on-disk state validating against rendered-master-xx: content mismatch for file \"/etc/mco/proxy.env\"", Node master-1 is reporting: "unexpected on-disk state validating against rendered-master-xx: content mismatch for file \"/etc/mco/proxy.env\"", Node master-2 is reporting: "unexpected on-disk state validating against rendered-master-xx: content mismatch for file \"/etc/mco/proxy.env\"" ~~~

Environment:- 
OCP version 4.12.46- UPI install with a proxy, 
- existing private DNS, 
- existing network.

It is observed that the rendered-master-xxx mc wanted to configure the following

function urldecode() { : "${*//+/ }"; echo -e "${_//%/\\x}"; } ;  urldecode "$(oc get mc rendered-master-xxx -o yaml | grep -B5 "path: /etc/mco/proxy.env" | grep source | tail -n 1 | cut -d, -f2)"

# Proxy environment variables will be populated in this file. Properly
# url encoded passwords with special characters will use '%<HEX><HEX>'.
# Systemd requires that any % used in a password be represented as
# %% in a unit file since % is a prefix for macros; this restriction does not
# apply for environment files. Templates that need the proxy set should use
# 'EnvironmentFile=/etc/mco/proxy.env'.
HTTP_PROXY=http://10.0.0.4:3128
HTTPS_PROXY=http://10.0.0.4:3128
NO_PROXY=.cluster.local,.svc,10.0.0.0/24,10.128.0.0/14,127.0.0.1,168.63.xx.xx,169.254.xx.xx,172.30.0.0/16,api-int.test.example.com,localhost

value observed on the machine was :
But the value in the master machine was:
sh-4.4# cat /etc/mco/proxy.env
# Proxy environment variables will be populated in this file. Properly
# url encoded passwords with special characters will use '%<HEX><HEX>'.
# Systemd requires that any % used in a password be represented as
# %% in a unit file since % is a prefix for macros; this restriction does not
# apply for environment files. Templates that need the proxy set should use
#'EnvironmentFile=/etc/mco/proxy.env'.
HTTP_PROXY=http://10.0.0.4:3128
HTTPS_PROXY=http://10.0.0.4:3128
NO_PROXY=.cluster.local,.svc,10.0.0.0/24,10.128.0.0/14,127.0.0.1,169.254.xx.xx,172.30.0.0/16,api-int.test.example.com,localhost

After manually vi into each master node and add the IP 168.63.xx.xx to each proxy.env resolves the issue. That IP is needed when installing with a proxy and a private azure DNS.    

    100%

    1. Install UPI cluster with proxy and existing private DNS + network
    2. Observe the installation to fail
    3. check proxy.env on the node
    

 Installation fails   

Installation should be successful    

- This was working fine 4.10 
- Also, The master mcp needs to be created because the first one is somehow deleted or was never created.