Thanks for your responses Antonio and David.
Not sure what exactly it was, but we were able to build the tests and run them on the MPS2 AN521 QEMU config. Per the Zephyr's build output following is the command line that seems to work. Mentioning it if it might help anyone else.
board=arm/mps2/an521 # or could be arm/musca_s1 CROSS_COMPILE=arm-none-eabi LAYOUTDIR="$TFMDIR/cmake_build/install/image_signing/layout_files/"
/home/zephyr/cmake/cmake-3.26.0-linux-x86_64/bin/cmake \ -S . -B cmake_build \ -DTFM_TOOLCHAIN_FILE=$TFMDIR/toolchain_GNUARM.cmake \ -DCROSS_COMPILE=$CROSS_COMPILE \ -DCMAKE_BUILD_TYPE=RelWithDebInfo \ -DTFM_PLATFORM=${board} \ -DCONFIG_TFM_BUILD_LOG_QUIET=OFF \ -DCONFIG_TFM_MEMORY_USAGE_QUIET=OFF \ -DCONFIG_TFM_SPM_BACKEND="IPC" \ -DBL2=TRUE \ -DMCUBOOT_IMAGE_VERSION_S="0.0.0+0" \ -DMCUBOOT_IMAGE_VERSION_NS="0.0.0+0" \ -DNS=TRUE \ -DTFM_ISOLATION_LEVEL=1 \ -DMCUBOOT_IMAGE_NUMBER=2 \ -DTFM_PARTITION_AUDIT_LOG=ON \ -DTFM_EXCEPTION_INFO_DUMP=ON \ -DTFM_PARTITION_LOG_LEVEL=TFM_PARTITION_LOG_LEVEL_DEBUG \ -DTFM_SPM_LOG_LEVEL=TFM_SPM_LOG_LEVEL_DEBUG \ -DTFM_PARTITION_NS_AGENT_MAILBOX=OFF \ -DTFM_PARTITION_PROTECTED_STORAGE=ON \ -DTFM_PARTITION_INTERNAL_TRUSTED_STORAGE=ON \ -DTFM_PARTITION_CRYPTO=ON \ -DTFM_PARTITION_PLATFORM=ON \ -DTFM_PARTITION_INITIAL_ATTESTATION=OFF \ -DTFM_PARTITION_FIRMWARE_UPDATE=OFF \ -DCRYPTO_RNG_MODULE_DISABLED=FALSE \ -DCRYPTO_KEY_MODULE_DISABLED=FALSE \ -DCRYPTO_AEAD_MODULE_DISABLED=FALSE \ -DCRYPTO_MAC_MODULE_DISABLED=FALSE \ -DCRYPTO_HASH_MODULE_DISABLED=FALSE \ -DCRYPTO_CIPHER_MODULE_DISABLED=FALSE \ -DCRYPTO_ASYM_SIGN_MODULE_DISABLED=FALSE \ -DCRYPTO_ASYM_ENCRYPT_MODULE_DISABLED=FALSE \ -DCRYPTO_KEY_DERIVATION_MODULE_DISABLED=FALSE \ -DCONFIG_TFM_ENABLE_FP=OFF \ -DTEST_S=ON \ -DTEST_NS=ON
cmake --build cmake_build -- install