If possible, Do you have a trustable friend that has steam MSFS to swap steam and xbox accounts with?
If yes see what happens when you try logging in to their account and see what happens. to make sure you log out of MSFS go and press the Windows start key, then type “Credential Manager”. After that open go and Click “Windows Credentials” and find the one that has : ‘Xbl_Ticket’ at the front of it. Remove that and your MSFS should be logged out of you Xbox.
After logging into to a friends steam account, try launching and see what happens.
For me I have an issue where I CTD right after the “Checking for updates” page. I basically narrowed it down to “Online Functionality” and that I can’t seem to play MSFS when connected to their servers or on internet. After furious amounts of tweaks, I’ve found out that my Steam/Xbox (Idk which tbh) is somehow the issue after I was able to login into my friends Steam and Xbox then trying to launch the Sim. I cant seem to play on my own account for reasons unknown.