The whole thing is so odd.
The wgs directory, user.cfg and, presumably, other first-run generated config files exist on the local machine (no idea how the Xbox is setup in terms of this), so what is wrong here that the application is somehow missing this fact when being started in a not-able-to-authenticate with Xbox Network scenario?
It seems like some massively bad bug or defect in the way the sync code works.
What, exactly, is happening that the application completely ignores the fact that the files created during a first-run startup are already present on the local machine? Why is it, then, re-creating them and overwriting what is already there?
It seems like the crux of this entire issue somehow lies in the answer to this question.
That fact that it affects the Xbox, too, when no other Xbox games have this issue seems like a key thing to investigate here by the developers.
Spend some time on this. Block a network port or block the Xbox Network authentication server via a firewall and simulate a downed Xbox Network situation and start looking for an answer to this problem.
As I wrote here, no other cloud-based service or Xbox (on an actual Xbox) game has this problem:
I could see Jörg and Asobo, on the Dev Q&A, jokingly trying to apportion blame to one another, but the fact that this is the only game that this happens to on an Xbox makes me think the issue is with Asobo and not MS’s cloud save system.