I am having the same issue.
Post Update: As a couple of people have mentioned, I got the download to work by using the xbox app.
I thought I had the Xbox app on my computer from another download or update but if I did, it is was not there now. I didn’t give it much thought because I don’t have an Xbox and my flight sim is from the Microsoft store and is running on my PC. I guess I don’t understand the relationship with the Xbox app and running Flight Sim on the PC.
Anyway, after trying many things to get the update to show up in the store for me, I downloaded the Xbox App, and started Flight Simulator from the icon in the Xbox App. The startup was the same as before, that is, it told me there was an update, and after pressing OK, Flight Sim crashed to desktop and opened up Microsoft Store. This time after selecting “getupdates” the new update was available.
Everything worked fine from there.
I don’t know if starting Flight Sim from within the Xbox App was the trick to get it going or just the fact the Xbox App was now installed on the PC.
As I said, I don’t know what the relationship is between the Xbox App and the program if you don’t use an Xbox.
Hope this helps others who may be having the same issue.