Literally the same issue, funny enough is, is that it worked fine when I was playing the Free version through game pass, but as soon as I upgraded to ultimate I started getting the Hang Type: Activation error. I kinda feel conned and ripped off, should have just stayed with the free version, now I can't play neither of the versions and I wasted money as well on a product that doesn't work. :D
But seriously though, either Microsoft should fix their own Ecosystem, and make sure this shit works before forcing everyone to use their shitty store, and their shitty UWP OR just release it on steam, so we can actually play the game. ;l
Sadly I doubt this will be fixed, I contacted support but don't think they'll be able to do much since people have been having this issue since the Lego expansion and of course they still do even now, so I might just as well go for that refund, if that doesn't somehow get a Hangtype: Activation error