To resolve the ValueError: default auth: cannot configure default credentials error when using dbutils from WorkspaceClient in a Databricks notebook, follow these steps:

1. Ensure SDK Installation: Make sure the Databricks SDK for Python is installed. You can install it using the %pip magic command in a notebook cell (-U or --upgrade):

   1. %pip install -U databricks-sdk

2. Restart Python: After installing the SDK, restart the Python environment to make the installed library available:

   1. dbutils.library.restartPython()

3. Use Default Notebook Authentication: The Databricks notebook automatically handles authentication. You can directly use the WorkspaceClient without setting environment variables:

   1. from databricks.sdk import WorkspaceClient
      
      # Initialize WorkspaceClient
      w = WorkspaceClient()
      
      # List files in the specified directory
      d = w.dbutils.fs.ls('/')
      
      for f in d:
          print(f.path)

By following these steps, you should be able to resolve the authentication issue and run your code successfully within a Databricks notebook.

Some troubleshooting steps that can help you find the problem:

Print the environment variables, look for DATABRICKS_HOST and/or DATABRICKS_TOKEN.

import os
for key, value in os.environ.items():
    print(f'{key}: {value}')

 You may also share the full stacktrace here, I'm assuming there is more printed along with the "ValueError: default auth: cannot configure default credentials". Are you trying this in a Serverless or Classic Cluster? Which DBR release?