I finally realized this issue, for me, was caused by the vjoy driver I installed for use with the Authentikit Tuning App.
The following is the procedure I used on Windows 11 based on the many posts I read about removing vjoy. I don’t have links to the original posts.
Go to Settings → Apps → Installed apps and uninstall the vjoy app. Alternatively, you can run the original vjoy app installer and it will remove the installed app before reinstalling it: simply cancel the re-installation. Then remove the driver by deleting it at c:\Windows\System32\drivers\vjoy.sys
Plug in the USB Xbox Controller, go to Device Manager and look in Human Interface Devices for HID-compliant game controllers. Double click on each to open their Properties, select the Driver tab and click on Update Driver. Repeat for each game controller in the list. The one for the Xbox controller should update and MSFS should once again recognize the device.