problem with steam login with 2FS (steam guard turned on)

Environment

Windows build number: 10.0.21364 Build 21364
Your Distribution version: 20.04
Your WSLg version: 1.0.17.1

Steps to reproduce

1. install steam deb on ubuntu.
2. try logging in via account which has 2FS (steam guard turned on),

WSL logs:

• Attach WSLg logs from /mnt/wslg

You can access the wslg logs using explorer at: \\wsl$\<Distro-Name>\mnt\wslg (e.g.: \\wsl$\Ubuntu-20.04\mnt\wslg)

• puseaudio.log
• weston.log
• versions.txt

Logs here.

Expected behavior

steam login should be smooth

Actual behavior

unable to use & login into steam app.
I have to disable steam guard, which is 2fa for steam then login. Although gaming exp was not good but that's another story. However afterwards when I again turned on steam guard and did the login it was a success. But still steam app lags like a lot.

checkout this video.

Start with the documented Steam Guard login steps on the listed Windows, Ubuntu, and WSLg versions, then review the linked video and /mnt/wslg logs (pulseaudio.log, weston.log, and versions.txt). Done means Steam login succeeds with Steam Guard enabled without requiring it to be disabled, with any remaining lag assessed separately.