Azure APIM - OAuth 2.0 - Internal Service API Authentication Issue - azure

Question

I need to expose an internal service API which runs on a server of our domain. The service is written in Java and is a SOAP service supporting basic auth. I need to implement Client Credentials flow via OAuth 2.0 and expose it via APIM (Azure API Management). The service will be used by external client applications (daemons).
What I've done so far is to create 2 Azure App Registrations: 1 Client App and 1 Proxy App.
App Roles have been defined in the proxy app and the client app has permissions on the proxy app.
In the client app I have setup Client Secret.
In the APIM initially I created a static http 200 response (via inbound policy) in order to test the service. Works fine.
<return-response>
<set-status code="200" />
<set-header name="content-type" exists-action="override">
<value>application/json</value>
</set-header>
<set-body>{
"status": "200",
"message": "OK"
}</set-body></return-response>
Then added an inbound JWT validation policy. I request a token from MS via Postman, pass the Bearer token to the API endpoint call and the token is being validated. Works fine.
Then I need to "route" the request to our internal service. We have already setup Azure Application Proxy, so I edit the Internal Url of the proxy enterprise app and set it to the internal service Url. I also remove the inbound static 200 response policy in order to allow the request to reach my internal service.
In such case if the proxy enterprise application "pre authentication" is set to passthrough it works fine but if it is set to "Azure Active Directory" it doesn't - I get a 200 response but requests to sign-in (html).
In case I leave the 200 reply from APIM (not reaching my endpoint) it works no matter if the enterprise application is set to "Passthrough" or "Azure Active Directory".
Any ideas?
Thank you in advance,
Dimitris