About your question concerning redirects to https://localhost:
First, please understand, that in this scenario your local KNIME AP is providing the localhost webserver. Using https here is technically infeasible because the localhost webserver would require a valid, signed SSL certificate to be accepted by your browser. No real-world certificate authority will issue a certificate for localhost. Also, AP does not offer functionality for adding an SSL certificate for the localhost webserver. If you cannot create an exception in your browser, so that it accepts http://localhost (or get IT to create such an exception) then I am afraid this will not work.
An alternative approach might be to perform the login in KNIME Business Hub, if you have access to such an installation on-premise. Current versions of KNIME Business Hub support interactive logins to Entra ID: