The first reason this issue can occur is if you are trying to run Parallel Computing Toolbox on a non-English local machine.
"Invalid character code sequence detected." usually means non-English characters are in a path or file name. Some potential paths that can cause this issue:
Check those paths and make sure they do not contain non-English characters. If they do, change it and then you should be able to use the Cluster Profile Manager.
If you are still experiencing the issue after checking the paths, run the following command within the MATLAB command prompt:
If it returns the following message, this is a known issue with a fix still in the works.
Invalid character code sequence detected
The current workaround to resolve this is to downgrade to MATLAB R2020a.
Hope this helps!
DISCLAIMER: These are my own views and in no way depict those of MathWorks.