Some Windows 8.1 users who have installed the September 2017 update KB4038792 report that the installation broke Microsoft Account sign-ins on their devices.
This issue is not the first that KB4038792 caused on machines running Windows 8.1. The connection during the update process was terminated for some users who tried to update the Windows 8.1 machine to the latest roll up update.
The new issue caused by the installation of KB4038792 affects some users who run Windows 8.1 on PCs. KB4038792 combines security updates and other changes. Since it is a cumulative all-in-one type of update, it is impossible to test which part of the update is responsible for the authentication issue.
They receive the following error message when they try to sign in to a Microsoft Account on affected devices:
Sign in to your Microsoft account
Sorry, we couldn’t connect to Microsoft services right now. If this problem persist, search for “network problem” on the Start screen.
A Microsoft support employee confirmed the issue on September 22th, 2017 on Microsoft's Answers forum. A customer reported the issue on September 16th, 2017 and stated that he could not log in to a Microsoft account on a fresh install of a Windows 8.1 HP 2G 250 laptop.
The error message was thrown when the user tried to sign in to an existing Microsoft account, but also during the creation of a new account.
Microsoft's answer to the support request was that the company was aware of the issue, and that it affected a "small subset" of users in "certain areas". Microsoft is working on a fix according to the response; no ETA though.
We're aware of this matter that affected a small subset of our users in certain areas when logging into their Microsoft accounts. Our engineering team is working hard to find and fix the reason for this known bug. We'll provide you with updates as soon as possible.
Another Microsoft employee confirmed the issue in another Microsoft Answers forum thread. This answer linked the issue to the latest September update for Windows 8.1 (which was KB4038792).
Microsoft suggests that affected customers switch to a local account for the time being until the issue is resolved.
As of the moment, affected Windows 8.1 users may use a local account instead of a Microsoft account while our engineers are fixing the bug. We have not yet received any news about when the fix will be released.
Microsoft promised that it will update the thread on the Microsoft Answers website when the update is available.
Günter Born and Woody Leonhard published information on the issue as well. It is unclear how widespread the issue is. Microsoft said that it affects a small subset of users only. Woody was able to find several lengthy threads on various Internet sites similar issues were mentioned in.