For those reading this in the future:
A bug was discovered in ArcGIS Monitor 2023.3.1 that causes the ArcGIS Server discover observer to fail if the target ArcGIS Server site contains one or more usage reports whose name is all number. For example, users would run into this issue if a usage report named 123456 exists. The workaround is to delete the usage report via the ArcGIS Server admin endpoint.
If you are running into this defect but are unfamiliar with ArcGIS Server usage reports and how to manage them, please submit a case with Esri Support and reference this Esri Community thread in the case description.
Josh