Just for affected users an information. My escalation here (probably) resulted in a confirmation from Microsoft - see Windows 10 status page - the issue affects probably only a couple of users - but it's spread to users of all Windows 10, Windows 8.1, Windows 7 SP1 clients and also affects Windows Servers.
Microsoft blames the out-of-band Internet Explorer security update KB4522016 as a root cause.
Thank you GBorn for your proactive assistance and for posting latest information. It's good to know Microsoft is working on the issue. When a fix is available, it will be appreciated if you again post here. Right now I have Windows Updates paused.
Note: I saw you also posted information on the AskWoody website where I was the original poster.