Checking the plugin: It uses old standards indeed, and the error is not coming from setuptools but some dedicated octoprint_setuptools indeed:
There were some issues around this in the past:
So right now, OctoPrint itself provides it internally:
For now to me it looks like an issue with the particular plugin, trying to load octoprint_setuptools without declaring it as build dependency. Makes sense that it is not available in the isolated build environment then. Let’s see how other OctoPrint plugins handle this.
Does installing the MfaTotp plugin work without --no-build-isolation?