AD LDS as Claims Provider in ADFS not working

Question

I am trying to set up AD LDS as a claims provider in ADFS using Microsoft document here. But I am not able to get it working. When I select the LDS option for my application instead of AD, I get following error.

An error occurred. Contact your administrator for more information

If I check the error log in event viewer of ADFS Server, I can see below details.

Encountered error during federation passive request. 

Additional Data 

Protocol Name: 
OAuthAuthorizationProtocol 

Relying Party: 
<My-Relying-Party> 

Exception details: 
Microsoft.IdentityServer.RequestFailedException: No authentication provider could be found that supports the authentication methods specified in the '<My-Identifier>' claims provider trust.
   at Microsoft.IdentityServer.Web.Authentication.GlobalAuthenticationPolicyEvaluator.FilterAuthMethodsByAccountStoreV2(ProtocolContext protocolContext, GlobalAuthenticationPolicy& globalPolicy)
   at Microsoft.IdentityServer.Web.Authentication.GlobalAuthenticationPolicyEvaluator.EvaluatePolicyV2(IList`1 mappedRequestedAuthMethods, IList`1 mappedRequestedACRAuthProviders, AccessLocation location, ProtocolContext context, HashSet`1 authProvidersInToken, Boolean isOnWiaEndpoint, Boolean& validAuthProvidersInToken)
   at Microsoft.IdentityServer.Web.Authentication.AuthenticationPolicyEvaluator.RetrieveFirstStageAuthenticationDomainV2(Boolean& validAuthProvidersInToken)
   at Microsoft.IdentityServer.Web.Authentication.AuthenticationPolicyEvaluator.EvaluatePolicy(Boolean& isLastStage, AuthenticationStage& currentStage, Boolean& strongAuthRequried)
   at Microsoft.IdentityServer.Web.PassiveProtocolListener.GetAuthMethodsFromAuthPolicyRules(PassiveProtocolHandler protocolHandler, ProtocolContext protocolContext)
   at Microsoft.IdentityServer.Web.PassiveProtocolListener.GetAuthenticationMethods(PassiveProtocolHandler protocolHandler, ProtocolContext protocolContext)
   at Microsoft.IdentityServer.Web.PassiveProtocolListener.OnGetContext(WrappedHttpListenerContext context)

EDIT:

Also to note, added claims provider trust is not visible in GUI of AD FS Management Console. Server in use is Windows Server 2016 Datacenter.