I used pico-imx7 as documented on this page. In the rocko branch of meta-edm-bsp-release that is the only machine file that exists.
The imx7d-pico is a different machine working on the warrior branch and contributed by @jorisoffouga
I don’t know what pico-imx7d is.
What branch are you building that causes the error? It’s not a matter of removing things from bblayers.conf. As the error indicates, you have to select one by setting an appropriate PREFERRED_VERSION_linux-firmware in your local.conf. But I didn’t see that in the branch tested here so I’m guessing you are using a different branch or at least that there are new commits on the rocko branch since this page was created.
Drew