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User Authentication module step 1 doesn't work on new developer org

I'm working through this step: Secure Your Users' Identity in the User Authentication module
The step asks you to create a user and assign it to a permission set that has Two-Factor Authentication for User Interface Logins selected. There are two problems:

1. I cannot create a platform user and assign it to that permission set without getting an error. 
2. The user I have assigned to that permission set can still log in without the second factor. 

Salesforce support won't help me.  They say it is out of scope.  The steps work on a Trailhead org, but the module specifically mentions provisioning a new Developer org.  
Ruchika BishtRuchika Bisht
I have completed this setup in Trailhead Playground. It worked for me, try in TP once.