OK, I solved it. All indications on this error message were to do with a mismatch between the Radius settings in pfsense and the Radius client in NPS. No amount of changing the settings worked UNTIL, I rebooted the pfsense. I got the idea from a post I found about Watchguard firewalls (go figure! bsd based?) where you have to reboot the unit to effect changes to radius settings.
After rebooting and adjusting my NPS Connection and Network Policies, the VPN connects and authenticates using domain credentials. One tip for anybody with Wireless Access Points authenticating to the same NPS. Create separate policies for IKEv2 auth and use the condition 'Client Friendly Name' and set this to same value as your Distinguished Name in the phase I settings. This will differentiate it from either your default or WifI PEAP policy and use MSCHAPv2 authentication.