I had this same issue on a family member's computer. I chatted with Microsoft and the only way we could get it fixed was a system reset. I'd say try a restore if you have a restore point first. This was a fairly new computer (Surface Laptop purchased a month ago). After the reset, facial recognition started working again as did the option for a PIN.
Reset this PC.
- From the sign-in screen, press and hold the shift key on the keyboard, select the power icon in the lower-right corner of the screen, and then select Restart. Keep holding the shift key until the device restarts and the Choose an option screen appears on a blue background.
- Once Windows Recovery loads, release the shift button, and then select Troubleshoot > Advanced options > Reset this PC> Keep my files.
- You should now be able to sign-in again.