I encountered this as well. To get past it, try the following:
- Shut down Visual Studio
- Go to your Azure management portal, and create a new user account within the Active Directory you created (I set mine as a Global Admin).
- Open up VS again and go through the steps of creating the WebApi project. This time, when you choose Organizational Accounts for authentication, use the credentials of the user that you just created - it should work now.