I installed the game on my primary Game Pass account. Signed out from the Xbox app, then still in the Xbox App, clicked the link to register an account from the sign in screen and added a second account. The game still runs on the second account.
Anyhow - check out this post, a reinstall followed by running the DeleteCloudSaves command has fully reset the game to the out of box config, then at first run it takes you to the character customizarion and red error guy is gone.