ähmm… that sounds a bit confusing 
It seems you have created a second account and may be therefore you get allways the “login dialog” ( it’s not Steam ). A big guess might be, that the problems you had with your account also relates to the Server-Offline message. But on other side you can login, otherwise you would not able to open MSFS.
Thus… Checking the mentioned “online functionaly” setting is number one. But I expect in case this setting is off, that you get at least the Server-List ( that you not only see AUTOMATIC[…] an no servers determined ).
Does the xbox-app show you, that you are online ?
Also… I remeber a similar case and searched a bit. I found following with an intressting hint:
I tried to set Multiplayer = Off and yes, then also the Server-list goes gray and empty. Can you check that setting too ? ( may be set all Online-Settings to On )